Do cross border and domestic acquisitions differ? Evidence from the acquisition of UK targets

We investigate the determinants of short term wealth effects for both public acquiring and target shareholders following the announcement of UK acquisitions over the period 1990–2005. Regardless of their nationality, overall acquirers incur losses, with domestic acquirers’ under-performing cross-border acquirers in general. For the latter no differences in returns between regions are found once the differences in corporate governance regimes are controlled for. Instead it is firm characteristics and in particular firm leverage that largely explain acquirers' returns. All targets gain significantly but the higher returns associated with international deals disappear once bid characteristics are controlled for. •We shed new light on returns for domestic and cross border acquirers of UK targets.•Domestic acquirers under-perform relative to cross-border acquirers in general.•Differences in corporate governance regimes offers no major explanatory power.•Firm characteristics, in particular firm leverage, mainly explains acquirer returns.•All targets gain significantly but no evidence of a positive cross border effect.