Learning Effects in Swedish Firms: Determinants of the Likelihood and Performance of Cross-Border Acquisitions

Abstract: This thesis examines the effect of past acquisition experience, industry momentum, past acquisition performance, CEO change, joint ventures and cancelled transactions on the likelihood and performance of subsequent cross-border acquisitions made by Swedish listed companies. We investigate learning effects for acquiring companies by using an organizational learning theory framework and use logit regression for the likelihood of subsequent international acquisitions and OLS regression for the performance of international acquisitions. Past acquisition experience has a significant positive effect on the likelihood of subsequent international acquisitions. More precisely, past acquisition experience in Sweden has a significant positive influence on the decision of Swedish companies to acquire in Northern Europe. Whereas experience in Sweden or in Northern Europe does not seem to be a driver of subsequent acquisitions in the rest of the world. Furthermore, host country experience has a stronger effect than international acquisition experience on subsequent acquisitions within that country. Industry momentum and no CEO change combined with previous acquisition experience have a positive significant influence on the likelihood of subsequent international acquisitions. A positive effect was also found for experience with joint ventures when tested together with past acquisition experience. Unfortunately, none of these variables could be shown to have a significant influence on the performance of subsequent cross-border acquisitions. Our thesis applied the concepts of previous researchers to Sweden and confirmed and extended their findings.