Interstate migration‐based social networks and M&A decisions

• Published in: The Financial review (Buffalo, N.Y.) Vol. 59; no. 1; pp. 113 - 153
• Main Authors: Lee, Suin, Pantzalis, Christos, Park, Jung Chul
• Format: Journal Article
• Language: English
• Published: Knoxville Blackwell Publishing Ltd 01-02-2024
• Subjects: information asymmetry; mergers and acquisitions; migration flows; network synergy
• ISSN: 0732-8516; 1540-6288
• DOI: 10.1111/fire.12349

Acquisition decisions and outcomes are found to be associated with the availability of interstate migration‐based social networks. The likelihood of bidders pursuing targets headquartered in migration sending states increases with these social networks’ size, in particular when (a) targets are in the same industry, (b) migration networks span distant states, and (c) targets are small. We also find smaller takeover premia and higher acquirer announcement returns in interstate transactions involving large migration networks. Our collective evidence is consistent with the notion that both enhanced expected synergies and information advantages may drive acquirers’ propensity to choose targets from migration sending states.