tions negatively contributes to shareholders’ wealth. This negative impact
applies to U.S. firms (Morck, Shleifer, and Vishny, 1990), European firms
(Martynova and Renneboog, 2006) and, more specifically, to Dutch firms
(Corhay and Tourani Rad, 2000). Global diversification seems to have a simi-
lar impact on acquisitions as industrial diversification. In particular, the excess
value of more globally diversified firms is smaller than less globally diversified
firms (Denis, Denis, and Yost, 2002). Besides, cross-border acquisitions pro-
vide lower abnormal returns than domestic acquisitions in the United States
(Moeller and Schlingemann, 2005). The impact of cross-border deals by
European firms provides mixed results. Consistent with results for U.S. firms,
Martynova and Renneboog (2006) find larger acquirer returns for domestic
acquisition announcements relative to cross-border announcements for a sam-
ple of 2,419 European acquisitions. However, Goergen and Renneboog (2004)
examine the returns of 228 acquisitions with a value of at least $100 million
and find the opposite result. The latter results are mainly driven by U.K. acquir-
ers. In contrast to Continental Europe, the United Kingdom knows a highly
active market for corporate control and has a high degree of shareholder pro-
tection (La Porta, Lopez-de-Silanes, Shleifer, and Vishny, 1998). Corhay and
Tourani Rad (2000) examine cross-border acquisitions by Dutch firms and find
small average positive abnormal returns for acquisitions in Western Europe
(1.44% for 11 days around the announcement) and the United States (0.25%
for 5 days after the announcement and 4.83% for 91 days around the
announcement), but no significant abnormal returns for acquisitions in Eastern
6.3 Research design
This section first discusses the data selection procedure, followed by a description
of variables that we use for the analysis. Finally, we will describe our empirical
6.3.1 Dataset
Our data collection starts with all Dutch exchange-listed firms over the period
1993–2004. We focus on industrial firms, i.e., we exclude financial and service
companies. In total, we study the acquisition announcements of 90 firms. For
each firm we search the electronic version of the Dutch financial daily, Het
Financieele Dagblad. We retrieve all newspaper articles with the company
names in the title or the body of the text and manually identify articles with the
initial announcements of acquisitions. In total, we include 865 acquisition
announcements by 64 firms.
For the 64 firms (in 312 firm years) we collect financial and corporate gover-
nance characteristics from several sources. We obtain stock and index returns
from Datastream. Financial data are obtained from the REACH database (Review
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