We examine cross-border acquisitions of private and public targets by U.S. firms by employing self selection models. We are particularly interested in the roles of country-level liquidity and transparency in cross-border acquisitions. Our results show that a typical acquisition deal of a private target is smaller in size, uses cash less frequently for payment, and involves more hightech firms than that of a public target. Most importantly, we find that acquiring firms are more likely to buy private targets in lower-transparency countries, but the level of country liquidity has little effect on the target selection. Furthermore, after accounting for the endogeneity bias associated with target selection, country liquidity is shown to be no longer a key determinant of acquirer returns in cross-border acquisitions. Our results are robust to alternative specifications
of dependent variables and self selection models.
JEL classification: G24; G34
Keywords: Private targets; Public targets; Cross-border acquisitions; Liquidity; Transparency
