M&A Premiums: Why Do Asian Soes Bid Higher? The Role of Economic, Political and Cultural Factors

This study aims to investigate whether Asian companies pay higher premiums in cross-border mergers and acquisitions (M&A) deals and the potential impact of acquirers being state-owned firms on the premium paid. Using a large sample of cross-border M&A during the period 2003 to 2021, we show that the 1-day (4-week) average premiums paid by Asian companies are significantly larger, by an additional 5.36 (10.16) percentage points, than those paid by non-Asian acquirers. Next, we find support for the argument that, besides of usual economic motives, unique strategic motives or political reasons may be also behind the significantly higher premiums paid as we document that state-owned Chinese acquirers offer economically significantly higher bids, with 1-day (4 Week) premiums paid being 36.68 (43.17) percentage points higher in cross-border M&As involving non-Asian targets than other acquiring firms. These results are robust to the inclusion of cultural distance and other control variables.