Hussain, T., Tunyi, A.A. and Agyemang, J. (2024) Corporate governance transfers: the case of mergers and acquisitions. International Journal of Disclosure and Governance, 21 (4). pp. 543-567. ISSN 1741-3591
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.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © The Author(s) 2023. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/. |
Keywords: | Firm corporate governance; Combined firm; Mergers and acquisitions; Portability theory; Operating performance |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 14 Nov 2024 08:38 |
Last Modified: | 14 Nov 2024 08:38 |
Status: | Published |
Publisher: | Springer Science and Business Media LLC |
Refereed: | Yes |
Identification Number: | 10.1057/s41310-023-00217-0 |
Related URLs: | |
Sustainable Development Goals: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:219449 |