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Moreover, physical distance i.e. geographical distance can also increase the cost of two companies to engage in merger and acquisition. Furthermore, corporate governance could also be an additional load to contracting cost if the merger fails to increase the legal protection of minority shareholders. The currency appreciation in the target countries due to exogenous reason could also be an influential factor that affects the cost of contracting (Rose, 2000). Physical infrastructure distance refers to the difference between home and host country in terms of the development of national transportation infrastructure. In this sense, the importance of physical infrastructure is the role that national transportation infrastructures play in order to facilitate the distribution of goods and services within the country. Moreover, it encourages private investments since it gives them the access to the resources they need. For instance, roads, ports, reliable electricity, telecommunications systems are plausible material for private investments to obtain needed resources (Seitz & Licht, 1995; Carr, et al., 2004). More specifically, physical infrastructure influence acquirer value creation since it decreases the transaction cost by reducing transportation costs for products, particularly for low value-to-weight or bulk ratios products, and fragile or perishable products. Thus, emerging markets’ governments invested heavily in developing physical infrastructure in order to attract FDI from other countries (Seitz ; Licht, 1995). For instance, Ireland and South Korean attracted FDI by heavily investing in internet infrastructures (Rugman, 2002; Lee, 2003). Moreover, acquirer intends to sell the majority of its local output to domestic market so physical infrastructure plays a crucial role in value creation. Moreover, local established distribution networks are needed to capitalize on registered technologies to achieve economy of scale (Carr, et al., 2004). More specifically, firms are motivated to gain knowledge and imitate technologies before potential rivals take advantage of it and exploit economies of scale (Isobe, et al., 2000). In this sense, advanced physical infrastructure e.g. distribution networks help foreign bidders achieve economies of scale faster and push local firms to imitate advanced technologies brought by them so foreign bidders intend to gain higher market share and create value in local markets (Mitchell, 1991; Orru, et al., 1991; Lee, 2003).

Scholars have found that high physical infrastructure quality leads to economic growth and thus it increases the net economic activities, resulting in economic growth (Chandra ; Thompson, 2000). Thus, acquiring targets in these countries offer a great deal of benefits including nearby factor markets and affordable consumers to buy products so they are more likely to create value. Moreover, physical infrastructures facilitate fulfilment of local customer needs since foreign bidders are physically proximate to local customers and able to obtain markets information i.e. information about local customers easily. Thus, they will be able to adapt to local markets, innovate and compete successfully in the international market since high-quality physical infrastructure makes information and knowledge transfer easier (Porter, 1992; Rangan ; Drummond, 2004). Thus, the cost of communication and information will be lower in these countries (Grosse ; Goldberg, 1991). Moreover, the foreign bidder will have a chance to integrate high-quality distribution networks in their complex global production and distribution network so resource exchange and information and knowledge transfer will be easier (Ghoshal ; Bartlett, 1990). Thus, in the comparison between high-quality physical infrastructure courtiers and lower quality one, foreign acquirers that acquire targets in the former are more likely to create value. However, acquirers have additional loaded cost i.e. distribution of goods and services, and obtain customer information to assess and monitor business that is located in geographically distant countries in more effective way and in a timely manner with limited physical infrastructure in the host country (Ursacki ; Vertinsky, 1992; Ghemawat, 2003). In this sense, low quality of physical infrastructure will lead to information asymmetry and hence it will prevent both domestic and international transactions (Ghemawat, 2001). Thus, costs tend to increase exponentially since organizational diseconomies will increase as a result of managing geographically distant subunits and monitoring local managers’ efforts and service qualities (Berger & Deyoung, 2001; Thomas & Grosse, 2001). In this sense, foreign bidders will be competitively disadvantaged when they penetrate in large distance markets. Thus, they will have limited chance to create value by acquiring targets in these countries. For instance, in Russian case different institutional setting can influence the behaviour of Russian firms in international markets namely Gazprom, where it suffers from transit route negotiation e.g. Ukraine and Belarus while exporting gas to Europe after the dismantle of Soviet Union and they are potential competitors of the company (Heinrich, 2003). Physical infrastructure influence acquirer value creation since it decreases the transaction cost by reducing transportation costs for products, particularly for low value-to-weight or bulk ratios products, and fragile or perishable products. Thus, emerging markets’ governments invested heavily in developing physical infrastructure in order to attract FDI from other countries (Seitz ; Licht, 1995). For instance, Ireland and South Korean attracted FDI by heavily investing in internet infrastructures (Rugman, 2002; Lee, 2003). Moreover, acquirer intends to sell the majority of its local output to domestic market so physical infrastructure plays a crucial role in value creation. Moreover, local established distribution networks are needed to capitalize on registered technologies to achieve economy of scale (Carr, et al., 2004). More specifically, firms are motivated to gain knowledge and imitate technologies before potential rivals take advantage of it and exploit economies of scale (Isobe, et al., 2000).
The success of takeovers is affected by arbitrage spread (arbitrage risk) and deal characteristics i.e. target resistance (friendly takeover or hostile deal), deal size and deal structure (cash vs stock takeovers). Branch, et al. (2008) found that these factors significant impact on the deal success. Furthermore, the paper showed that neutral network model outperforms logistic regression in predicting deal outcome.

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