Location matters: Market reactions to South African corporations’ cross-border transactions

Abstract

We evaluate the market reaction to 320 cross-border transactions (CBTs) by South African-listed corporations from January 2005 to June 2024. The sample is divided according to the development state of the target company’s country and the currency of the target’s earnings. We observe that South Africa-listed firms experience negative (positive) abnormal returns following the announcement of CBTs in developed (emerging) markets. Similarly, negative (positive) abnormal returns are experienced for targets with hard (soft) currency earnings. We find a negative relationship between cultural distance and the value created through CBTs.