VALUE CREATION IN ACQUISITIONS: CROSS-BORDER VERSUS DOMESTIC ACQUIRER TARGETING INDONESIA

• Main Author: Narizta Syahputri, Syahira
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/52608
• Institution: Institut Teknologi Bandung

The multinational enterprise aims to create value and satisfies shareholder needs by operating across national borders (Verbeke, 2009). Mergers and acquisitions is one of the foreign direct investment strategies and it is the most prominent way of solution for keeping pace with the firm’s competitive conditions and changing market for globalization (Danbolt & Maciver, 2 2012; Akgöbek, 2012). As reported by the United Nations Conference on Trade and Development (2020), in 2019, Indonesia is one of the five largest foreign direct investment recipients in Asia developing economies. However, announcement returns for cross-border and domestic acquisitions are significantly different from each other, as Moeller & Schlingemann (2005) found for US acquirers. Indeed, international expansion through acquisitions offers significant value-creation opportunities for firms; but it also presents significant challenges that jeopardize the potential hypothesized gains (Aybar & Facici, 2009). This leads to the following research question: How is the value creation of both cross-border and domestic acquirer firms affected when acquiring Indonesian firms? This paper aims to know which method is better if anyone wants to target Indonesian firms for acquisitions: through cross-border or via domestic acquisitions. The literature review proposes a hypothesis on the better method. To test it, all the process of gathering the data will be explained then being processed with the event study methodology. The result then will be analysed, reported and discussed with the views from literature review to reach the answer to the