Cross‐Border Acquisitions by African Firms: The Effect of Corporate Governance on Ownership Participation

ABSTRACT Executive Summary Strategic decisions related to ownership participation in cross‐border acquisitions (CBAs) are among the most fundamental choices for African firms to address the unique internationalization challenges related to their home country context. We explore the corporate governance factors influencing the equity ownership stake pursued in 261 CBAs by listed firms in five African countries between 2010 and 2022. The results indicate a potential agency problem related to executive remuneration. The monitoring role of domestic institutional investors and their interaction with the institutional environment in the home and host countries is further emphasized. Managerial Implications of the Study Practitioners of African firms need to consider the combined firm‐level corporate governance and institutional distance implications of CBAs when evaluating international expansion strategies. Originality/Value Our study provides a novel agency perspective on ownership decisions in CBAs by African firms and thereby complements existing research, which predominantly focused on institutional theory.