SHAREHOLDER BENEFITS FROM CORPORATE INTERNATIONAL DIVERSIFICATION - EVIDENCE FROM UNITED-STATES INTERNATIONAL ACQUISITIONS

Do international acquisitions-in contrast to their domestic counterpar ts-create value for the acquiring firms' shareholders? This study exam ines the valuation consequences of 276 U.S. international acquisitions made in the period 1975-1988, and provides direct evidence on the eff ect of international acquisitions on the market value of U.S. bidding firms. It is shown that, on average, international acquisitions create value for the acquiring firms. The study also finds that the value cr eated is a function of the nature of the acquisition (e.g., related or unrelated); the nature of the bidding firm's industry (e.g., its conc entration level and advertising intensity); the nature of the acquirin g firm (e.g., its prior international experience and its current profi tability); and the nature of the macroeconomic environment (e.g., tax regulations and the relative strength of the U.S. dollar).