Bhaumik, S.K. orcid.org/0000-0002-4459-3659, Owolabi, O. and Pal, S. (2018) Private information, institutional distance, and the failure of cross-border acquisitions: Evidence from the banking sector in Central and Eastern Europe. Journal of World Business, 53 (4). pp. 504-513. ISSN 1090-9516
Abstract
In this paper, we develop an information theory-based framework about cross-border acquisitions in the financial intermediation industry. We argue that even though “soft” information embedded in customer relationships of local banks can, in principle, help multinational banks (MNBs) overcome informational disadvantage in host countries, the cost of verification of this private information may, paradoxically, make local banks with significant customer relationships unattractive for cross-border acquisition. Further, we propose that the relationship between the amount of customer information embedded in an incumbent bank and the likelihood of its acquisition by a MNB is modified by the institutional distance between the home and host countries of the MNB. Specifically, the strength of the negative relationship increases with institutional distance between home and host countries because it increases the verification cost of private information with institutional distance. Our hypotheses find support in the context of Central and Eastern Europe.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2018 Elsevier Inc. This is an author produced version of a paper subsequently published in Journal of World Business. Uploaded in accordance with the publisher's self-archiving policy. Article available under the terms of the CC-BY-NC-ND licence (https://creativecommons.org/licenses/by-nc-nd/4.0/) |
Keywords: | Multinational bank; Cross-border acquisition; Customer relationship; Private information; Verification cost; Institutional distance; Central and Eastern Europe |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 23 Feb 2018 16:09 |
Last Modified: | 07 Oct 2020 10:36 |
Status: | Published |
Publisher: | Elsevier |
Refereed: | Yes |
Identification Number: | 10.1016/j.jwb.2018.02.005 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:127793 |
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Licence: CC-BY-NC-ND 4.0