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1、 外文翻译外文翻译原文Mitigating risks in cross-border acquisitionsIn the past 20 years, the volume of cross-border acquisitions for corporate assets has increased nearly three times faster than the volume of domestic acquisitions. Compared to domestic acquisitions, cross-border acquisitions present greater ch
2、allenges for a buyer because of institutions and cultural values that are unfamiliar to a foreign corporation. Firms acquiring assets in a foreign country may face different accounting practices and disclosure requirements, which hamper the due diligence process. The internalization of assets into t
3、he buyer operational structure is further complicated by cultural peculiarities that determine how strategies are formulated and business is conducted. Acquiring firms may also encounter legal systems with different protection of property rights, a factor that adds uncertainty to future cash flows.
4、The greater level of uncertainty in cross-border acquisitions reduces the value of the assets being exchanged (Akerlof 1970; Stiglitz, 2000) and appears as an explanation to the poor performance of acquirers in cross-border acquisitions (Denis et al., 2002; Moeller and Schlingemann, 2005). In this a
5、rticle, I will analyze different alternatives in which buyers can ameliorate the risks inherent in these transactions. This analysis is important for understanding the optimal entry strategies for firms that want to expand their operations in foreign markets. Acquiring firms can reduce investment un
6、certainty by structuring the payments so they are contingent on performance of the assets. This paper analyzes two alternative contingent payments.First, buyers can pay with stock, sharing the risk of the acquisition with the sellers as they will retain an equity position in the acquirer. Second, ac
7、quiring firms can use earn out payments contingent on the performance of the assets being acquired (Kohers and Ang, 2000).Buyers and sellers can operate assets together in an equity joint venture (JV) to improve the exchange of information on the quality of the assets. Nanda and Williamson (1995) de
8、scribe several JVs that were conceived as a mechanism to exchange information conducive to an eventual acquisition. In a sample of predominantly domestic JVs, Mantecon and Chatfield (2007) find that JVs can be mechanisms to transfer assets in the presence of valuation uncertainty. The purpose of thi
9、s article is to understand which of these mechanisms for reducing 2uncertainty is more beneficial to acquirers of cross-border corporate assets. I hypothesize that the use of earnouts and stock as a method of payment and the formation of equity JVs conducive to acquisitions should be more valuable w
10、hen investment uncertainty is more severe. This article contributes to the existing literature by testing this hypothesis in a sample of 30,783 acquisitions announced from 1985 to 2005. This sample involved buyers from 75 nations engaged in 6824 cross border-acquisitions of assets located in 128 cou
11、ntries.The results show that the valuation effects to acquirers in cross-border deals depend on the information obtained about the assets before the acquisition. Buyers experienced large gains in the acquisition of assets that were operated in a JV, suggesting that acquirers profited from the inform
12、ation obtained while jointly operating the assets. I hypothesize that these gains should be positively associated with the degree of uncertainty being resolved. Consistent with this hypothesis, acquirers experienced larger gains in the acquisitions of JVs located in countries with higher levels of i
13、nvestment risk and in the presence of higher levels of valuation uncertainty.These results suggest that JVs can be used as a transitional mechanism to reduce the uncertainty associated with cross-border acquisitions in the presence of severe valuation uncertainties and country investment risks. Mech
14、anisms to ameliorate investment risk in cross-border acquisitions.Although the evidence on the valuation effects to acquirers of cross-border acquisitions remains inconclusive, these buyers face higher levels of uncertainty for several reasons. The due diligence process is complicated by different a
15、ccounting and disclosure requirements. Assimilation of assets is also more difficult because of cultural differences that determine how business is conducted. In addition, legal systems with different levels for protection of minority shareholders and enforceability of contracts increase the difficu
16、lty to value future cash flows.How can buyers reduce the uncertainty associated with crossborder acquisitions? Reuer (2005) suggests the use of contingent payments and operational relationships. The use of stock as currency can be a contractual tool to reduce investment risk because it has a contingent-pricing effect (Hansen, 1987). The target firm, accepting stock, signals positive information on the value of the acquirer and on the assets being transferred. Buyers in turn signal their own qual
