FBA Seminar Series No. 01/1415

This paper studies a special strategy of developing-countries on their way to catch up with developed countries, namely, international acquisition with possible initial bank borrowing. We identify two types of acquisition gains: branding synergy and efficiency synergy, the former of which arises from removing information asymmetry on product quality and the latter comes from adopting the acquiree’s better technology. We show that a separating equilibrium exists at which only a high quality firm from the developing country can take over a foreign firm, while a low quality firm cannot. Accordingly banks can design a mechanism to finance such high-quality acquisition and exclude low-quality firms. Moreover, such takeovers can benefit the acquirer, the acquiree and the consumers.

Date: September 29, 2014 (Monday)

Time: 16:00~17:00

Venue: Faculty of Business Administration, E22-1001

A Short Biography of Prof. Lex Zhao
Prof. Zhao graduated from Renmin University first with a B.A. degree and then from University of Florida with a Ph.D. degree. He now works as a full professor of economics at Kobe University. He is a leading expert on international economics in Japan with many good publications in the world’s top field journals. He is active in organizing international conferences/ symposia/ workshops and serving as regular and guest editors for some international referred SSCI journals.