Acquirers and financial constraints: Theory and evidence from emerging markets

Financial crises in emerging market economies induce diverging patterns of ownership stakes and subsequent divestiture rates among domestic foreign acquirers. We rationalize these empirical findings a tractable model where acquirers are subject to borrowing constraints. In contrast standard fire-sale effects operating for acquisitions by acquirers, acquisition firms shaped novel counteracting selection effect, resulting larger acquired more persistent ownership. present evidence consistent with the model’s predictions using large dataset cross-border over 1990–2007. The estimated contribution is quantitatively significant, leading 12% increases stakes, 25% full acquisitions, 30% declines crisis-time acquisitions. Our results demonstrate how financial can have both short- long-run through corporate control, changing set long keep