The Impact of International Acquisition Announcements on the Returns of U.S. Lodging Firms

The existing hospitality literature describes how global diversification in the hotel industry looks for a broader presence regardless of existing global representation. However, the finance literature reports a negative impact from global diversification because of the potentially higher cost of coordinating corporate policies. Moreover, agency problems can increase along with the size of the firm. This study measures the wealth impact of hotel global diversification on bidders at the time of international acquisition announcements. We find significant abnormal positive returns on the day of the announcement. We also find that international acquisitions have lower abnormal returns than domestic acquisitions at the time of the announcement