Abstract
Study examines the value effects of emerging market multinational enterprises' (EMMs) international acquisitions in other emerging markets. Fewer studies investigate mergers and acquisitions (M&As) between emerging economies than between developed nations. This paper studies investor reaction to acquisition under institutional similarity and closes the gap in the literature by asking: How does an institutional similarity of emerging market influences acquirer investors’ reactions to its acquisition announcement? or, do acquisitions among emerging economies create firms value? Study integrates institutional theory with signaling theory where emerging market status acts as a signal for institutional similarity as a natural phenomenon for positive institutional leverage for EMMs in an acquisition announcement. Study explicitly invokes signaling theory to understand how organisations mitigate information asymmetries about unobservable and latent quality constituting majority of management studies. Propositions suggest that there is evidence to support the notion that institutional similarity has a favorable effect on investor gain.