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Cherry Picking versus Lemon Grabbing: Target Selection of Cross-Border and Domestic Acquisitions in Japan

Author

Listed:
  • Ralf Bebenroth

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

  • Pao-Lien Chen

    (Institute of Technology Management National Tsing Hua University)

Abstract
This paper investigates whether foreign firms overtake better local targets relative to domestic firms. Building on the geographic proximity and the value creation argument, we make predictions about whether domestic or foreign firms "cherry pick" the targets or "grab lemons". Our findings from a sample of local targets in Japan acquired by domestic and cross domestic acquirers show that both groups cherry-pick local targets, but they evaluate them differently. Targets with a better financial performance are more likely overtaken by domestic acquirers whereas those with a larger employee or market size are more likely overtaken by foreign acquirers.

Suggested Citation

  • Ralf Bebenroth & Pao-Lien Chen, 2018. "Cherry Picking versus Lemon Grabbing: Target Selection of Cross-Border and Domestic Acquisitions in Japan," Discussion Paper Series DP2018-13, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2018-13
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2018-13.pdf
    File Function: First version, 2018
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    References listed on IDEAS

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    Cited by:

    1. Ostapchuk, Igor & Gagalyuk, Taras & Epshtein, David & Dibirov, Abusupyan, 2021. "What drives the acquisition behavior of agroholdings? Performance analysis of agricultural acquisition targets in Northwest Russia and Ukraine," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(4), February.
    2. Ostapchuk, Igor & Gagalyuk, Taras & Epshtein, David & Dibirov, Abusupyan, 2021. "What drives the acquisition behavior of agroholdings? Performance analysis of agricultural acquisition targets in Northwest Russia and Ukraine," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 24(4), pages 593-613.

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    More about this item

    Keywords

    Cross-border acquisitions; Target selection; Cherry-picking; Geographic proximity; Value creation;
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