Business group and cross-border acquisitions: evidence from multilatinas

Abstract

Objective: This study seeks to examine how multilatinas affiliated with a business group influence the degree of ownership acquired in their cross-border acquisitions in the region. Method: We considered a sample of 342 cross-border acquisitions conducted by the 58 multilatinas from Argentina, Brazil, Chile, Colombia, and Mexico during the period that extends from 2008 to 2018. To test our hypotheses, we selected the Generalized Estimating Equations (GEE), a variant estimator of GLM Generalized Linear Models (GLS). Main Results: Drawing on agency and internationalization theories, we provide evidence that the property of multilatinas in a cross-border acquisition is determined by the factors of the company–business group affiliation, international diversification and state-shareholding structure. In general, the degree of ownership in cross-border acquisitions will be determined by the degree of diversification. In addition, we conclude that multilatinas with strong state-owned capital are likely to acquire a lower degree of ownership of cross-border acquisitions within the region. Relevance / Originality: This study contributes to theory development by providing more information about multilatinas and by integrating the agency theory theoretical underpinnings in explaining the degree of ownership. Specifically, this research provided new insight to clarify our understanding of multilatinas and their affiliation with business groups as determining factors in acquired ownership in cross-border acquisitions. Theoretical / Methodological Contributions: This research empirically demonstrates the importance of the degree of ownership in the process of acquisition of foreign companies by multilatinas. This study considered several common characteristics of multilatinas in the process of international acquisition, such as business group, diversification and state ownership participation.