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The Geography of Block Acquisitions




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    • Kang is from Nanyang Business School, Nanyang Technological University and Kim is from Rutgers Business School at Newark and New Brunswick, Rutgers University. We are grateful for comments from Joon Chae, Ted Fee, Sung-Wook Joh, Hyung-Cheol Kang, Bong-Chan Kho, Dongcheol Kim, Joong Hyuk Kim, Noolee Kim, Wei-Lin Liu, David North, Clemens Sialm, and seminar participants at Korea University, Seoul National University, the 2006 KAFA-KSRI Joint Conference, the 2007 Financial Management Association meeting, and the 2007 Western Finance Association meeting. We thank especially an anonymous referee and Robert Stambaugh (the editor) for many detailed and helpful suggestions. Kim acknowledges financial support from University of Missouri-Kansas City. All errors are our own.


Using a large sample of partial block acquisitions, we examine the importance of geographic proximity in corporate governance and target returns. We find that block acquirers have a strong preference for geographically proximate targets and acquirers that purchase shares in such targets are more likely to engage in post-acquisition target governance activities than are remote block acquirers. Moreover, the targets of these acquirers realize higher announcement returns and better post-acquisition operating performance than do targets of other types of acquirers, particularly when they face greater information asymmetries.