This paper examines how information asymmetry affects cross-border strategic alliance formation by US firms over the period 2000–2008. We construct a measure, information costs, based on both geographical distance and the proportion of worldwide GDP the partner’s home country represents. Consistent with our expectations, we find an inverse association between information costs and cross-border strategic alliances. When considering the proportion of alliances formed with publicly quoted overseas partners, we find this is unaffected by the level of information costs but rather the level of stock market development, tax rate and general economic conditions. Information costs are, however, significantly negatively related to alliances with overseas private organizations. Our results offer clear support for the on-going importance of information asymmetry in corporate decision making.

We investigate the impact of corporate life cycle on takeover activity from the perspective of acquiring firms. Using the earned/contributed capital mix as the proxy for firm life cycle, we find a highly significant and positive relation between firm life cycle and the likelihood of becoming a bidder. This finding is, however, driven by the mature rather than the old acquirers in the sample. Further we find that, whilst firm life cycle has a positive effect on the probability that a deal will be negotiated, it is negatively related to tender offers. In addition, the likelihood of making both cash and mixed deals are positively related to the corporate life cycle. Finally, we find that life cycle has a negative impact on the abnormal returns generated on the announcement of a deal although it is unable to distinguish between the returns received by firms at different stages in their life cycle.

This paper examines takeover and divestiture activity at the industry level for the population of UK firms over the period 1986–2000. Consistent with US research, takeovers in the UK cluster both across industries and over time. The evidence for divestitures indicates clustering across industries only. The paper further investigates whether broad and specific industry shocks (e.g., growth, free cash flow, concentration, deregulation, foreign competition, technology, stock market performance) explain takeover and divestiture clustering at the industry level. The results suggest that broad shocks increase (decrease) the likelihood of takeovers (divestitures), although not significantly for takeovers. Specific industry shocks that increase the likelihood of takeover activity include low growth, the threat of foreign competition and high stock market performance. For divestitures, high industry concentration and deregulation increase activity. Little evidence is found for deregulation as a significant factor in explaining takeover activity.

This paper examines the value-added role of industry specialist advisors in M&As. We find that compared to non-industry specialists, advisors specializing in the target industry help acquirers garner higher announcement returns. However, there is no significant difference in acquirer returns between advisors specializing in the acquirer industry and non-industry specialists. The choice of a specialist advisor in the target industry benefits acquirers most when there is significant information asymmetry surrounding the targets. Moreover, the bulk of value creation comes from small- to medium-sized financial advisors, rather than large, top-tier investment banks. Finally, our results suggest that advisors specializing in the target industry add value mainly through their ability to help acquirers purchase targets at a lower price.