Does economic freedom distance affect long-run post-acquisition performance and ownership level in cross-border acquisitions?

Using a large international sample of 35,798 cross-border acquisition (CBA) deals, we find strong evidence that economic freedom distance affects long-run post-acquisition performance and ownership level. We build our arguments using organizational imprinting theory to show that greater economic freedom distance leads to higher post-acquisition performance. However, our findings show that greater ownership level in the target firm adversely affects the imprinting effects in CBA deals. In addition to arbitrage advantages, higher economic freedom distance increases information asymmetry risks for MNEs, prompting them to opt for lower ownership levels. Finally, we demonstrate that ownership decisions of MNEs from emerging economies differ significantly from those that domicile in developed countries.