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Portability of firm corporate governance in mergers and acquisitions

Author

Listed:
  • Tanveer Hussain

    (School of Economics and Management, University of Minho, Portugal)

  • Gilberto Loureiro

    (NIPE/Center for Research in Economics and Management, University of Minho, Portugal)

Abstract

We study the corporate governance portability from bidders to targets in Mergers and Acquisitions and its impact on bidder announcement returns. We find that the bidder’s cumulative abnormal returns are higher in acquisitions where the bidder’s corporate governance quality exceeds that of the target. This result suggests a positive valuation effect for bidder shareholders resulting from the portability of good firm corporate governance from bidders to targets. We also find that this effect is stronger when bidders are domiciled in countries with better corporate governance. The results pass several robustness tests, including alternative measures of firm corporate governance and different sample periods.

Suggested Citation

  • Tanveer Hussain & Gilberto Loureiro, 2022. "Portability of firm corporate governance in mergers and acquisitions," NIPE Working Papers 8/2022, NIPE - Universidade do Minho.
    • Handle: RePEc:nip:nipewp:8/2022
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    File URL: http://repositorium.sdum.uminho.pt/handle/1822/79921
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    Citations

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    Cited by:

    1. Sun, Zeyu & Kong, Ningning & Wu, Lei & Bao, Yu, 2024. "Does contingent payment in M&As induce acquirers’ earnings management? Evidence from performance commitment," Research in International Business and Finance, Elsevier, vol. 69(C).
    2. Ying Ying & Shanyue Jin, 2024. "Impact of Environmental Regulation on Corporate Green Technological Innovation: The Moderating Role of Corporate Governance and Environmental Information Disclosure," Sustainability, MDPI, vol. 16(7), pages 1-17, April.

    More about this item

    Keywords

    corporate governance portability; global mergers and acquisitions; M&A announcement returns; international corporate governance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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