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Does which country a seller or bidder firm operates in affect mergers and acquisitions?

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  1. Introduction
  2. Background of differences
    1. Investor protection
    2. The legal system
    3. Market-centered or bank-centered corporate systems
    4. Shareholder concentration
  3. UK/US firm acquiring a continental European firm
  4. Continental European firm acquiring a UK/US firm
  5. Conclusion

Does which country a seller or bidder firm operates in have such a big impact on mergers and acquisitions? My aim is for this paper to answer that question by analysing the differences between the UK/US system of corporate governance and the continental European system of corporate governance.
I have identified several key aspects which I believe are fundamental to the understanding of why the UK/US and continental European system of corporate governance are different.

The argument is structured as follows:
Section 2 is a brief discussion of the aspects that differentiate the two different systems of corporate governance explored in this paper.
Section 3 develops upon Section 2 by exploring the aspects further, in relation to an example of a UK/US firm acquiring a continental European firm.
Section 4 does the same as Section 3, but for the example of a continental European firm acquiring a UK/US firm.
Section 5 concludes the argument.

[...] Rossi and Volpin make the following statement, based on their analysis: acquirers typically come from countries with better accounting standards and stronger shareholder protection than the targets' countries.?[17] It is important to recognise that, because the continental European firm has a higher ownership concentration, a hostile takeover situation is much less likely: after all, if one person does not want to sell their majority share in a company, there is no way that the company can be taken over in a hostile bid, as Rossi and Volpin state: ?Hostile takeovers require that control be contestable, a feature that is less common in countries with poorer investor protection?[18] Another factor to look at is how the takeover premium is affected by the corporate governance of the bidder and target countries. [...]

[...] Looking at the means of payment in this scenario, Rossi and Volpin state that: ?Cross-border deals might be more often paid in cash because shareholders dislike receiving foreign stocks as compensation?[22] However, Rossi and Volpin go on to make the point that the shareholders in a target company are likely to accept foreign stocks if the acquirer firm's country has greater investor protection than the target's country.[23] This is presumably because the target shareholders do not want to receive foreign stocks with a high risk of being expropriated. [...]

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