Performance of domestic and cross-border acquisitions: empirical evidence from Russian acquirers

This paper investigates the impact of domestic and international acquisitions initiated by Russian firms on their operating performance. In general, acquisitions can be associated with synergy gains, internalisation advantages and higher market power. However, acquisitions may also give rise to agency problems as well as new integration and organisational costs, leading to an ambiguous overall impact on the performance of acquirers. Based on a sample of more than 600 acquirers we show that both domestic and international acquisitions tend to reduce the performance of acquirers compared to non-acquiring firms. Examining how different deal, firm and industry level characteristics moderate the value destroying effects of acquisitions, our results suggest that Russian acquirers suffer from the inability to leverage value due to limited M&A experience and capability, especially when making international acquisitions.