The critical question in this chapter is whether cross-border mergers and acquisitions are a channel through which companies can opt out of a poor governance regime. The main prediction is that in cross-border mergers and acquisitions companies from countries with good corporate governance should be acquirers, and companies from countries with poor corporate governance should be targets. This hypothesis is confirmed using a sample of cross-border mergers and acquisitions in 49 countries in the 1990s. Targets tend to come from countries with lower judicial efficiency and less developed banking sectors than their acquirers. The average corporate governance of companies acquiring in one country is higher than the governance standards of that country. A second prediction is that cross-border merger and acquisition activity should be concentrated in industries that need more external capital and face greater agency problems. Hence, companies from countries with worse governance should be more likely to be acquired in cross-border deals in industries that need more external financing and in industries that face greater agency costs. This prediction is confirmed using a measure of external dependence at the industry level.

The governance motive in cross-border mergers and acquisitions

Rossi, Stefano;
2007

Abstract

The critical question in this chapter is whether cross-border mergers and acquisitions are a channel through which companies can opt out of a poor governance regime. The main prediction is that in cross-border mergers and acquisitions companies from countries with good corporate governance should be acquirers, and companies from countries with poor corporate governance should be targets. This hypothesis is confirmed using a sample of cross-border mergers and acquisitions in 49 countries in the 1990s. Targets tend to come from countries with lower judicial efficiency and less developed banking sectors than their acquirers. The average corporate governance of companies acquiring in one country is higher than the governance standards of that country. A second prediction is that cross-border merger and acquisition activity should be concentrated in industries that need more external capital and face greater agency problems. Hence, companies from countries with worse governance should be more likely to be acquired in cross-border deals in industries that need more external financing and in industries that face greater agency costs. This prediction is confirmed using a measure of external dependence at the industry level.
2007
9780123741424
Gregoriou, Greg N.; Renneboog, Luc
Corporate governance and regulatory impact on mergers and acquisitions: research and analysis on activity worldwide since 1990
Rossi, Stefano; Volpin, Paolo
File in questo prodotto:
File Dimensione Formato  
Rennebog-Ch03.pdf

non disponibili

Tipologia: Pdf editoriale (Publisher's layout)
Licenza: NON PUBBLICO - Accesso privato/ristretto
Dimensione 156.18 kB
Formato Adobe PDF
156.18 kB Adobe PDF   Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/4001271
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 5
  • ???jsp.display-item.citation.isi??? ND
social impact