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Corporate governance transfers: the case of mergers and acquisitions
,
Jacob Agyemang
International Journal of Disclosure and Governance
Swansea University Author:
Tunyi Tunyi Abongeh
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DOI (Published version): 10.1057/s41310-023-00217-0
Abstract
We study changes in corporate governance around mergers and acquisitions by comparing the ex-post corporate governance of the combined firm with the ex-ante weighted average governance of the bidder and target. We find that when the quality of the bidder governance is better than the target before t...
| Published in: | International Journal of Disclosure and Governance |
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| ISSN: | 1741-3591 1746-6539 |
| Published: |
Springer Science and Business Media LLC
2023
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| Online Access: |
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa65367 |
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| Abstract: |
We study changes in corporate governance around mergers and acquisitions by comparing the ex-post corporate governance of the combined firm with the ex-ante weighted average governance of the bidder and target. We find that when the quality of the bidder governance is better than the target before the acquisition, the ex-post corporate governance quality of the combined firm is better than the ex-ante weighted average of each firm. We document post-acquisition improvement in the combined firm’s board independence, audit committee independence, stock compensation, and minority shareholders protection, proposing that these firm-level attributes serve as potential channels to explain better corporate governance quality of the combined firm. The operating performance of the combined firm also improves when the bidder’s pre-deal governance quality is better than the target. Our results support the portability theory of corporate governance, suggesting that poorly governed targets are better off if acquired by better-governed bidders. |
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| Keywords: |
Firm corporate governance , Combined firm, Mergers and acquisitions, Portability theory, Operatingperformance |
| College: |
Faculty of Humanities and Social Sciences |
| Funders: |
The work is done without any financial support. |