Hussain, Tanveer and Kryzanowski, Lawrence and Loureiro, Gilberto and Sufyan, Muhammad (2024) Enhancing corporate governance quality through mergers and acquisitions. Journal of International Financial Management and Accounting, 35 (2). pp. 465-500. DOI https://doi.org/10.1111/jifm.12203
Hussain, Tanveer and Kryzanowski, Lawrence and Loureiro, Gilberto and Sufyan, Muhammad (2024) Enhancing corporate governance quality through mergers and acquisitions. Journal of International Financial Management and Accounting, 35 (2). pp. 465-500. DOI https://doi.org/10.1111/jifm.12203
Hussain, Tanveer and Kryzanowski, Lawrence and Loureiro, Gilberto and Sufyan, Muhammad (2024) Enhancing corporate governance quality through mergers and acquisitions. Journal of International Financial Management and Accounting, 35 (2). pp. 465-500. DOI https://doi.org/10.1111/jifm.12203
Abstract
This study examines whether the pre‐deal target‐bidder firm governance gap affects the bidder's postdeal change in governance quality. We estimate cross‐sectional regressions using mergers and acquisitions from 2004 to 2016. We find that the bidder's firm‐level governance improves for acquisitions where the target's governance quality is better than that of the bidder preacquisition. We attribute the results to reverse portability, suggesting that the predeal governance gap creates space for governance transfer, and bidders can adopt better governance of targets after the acquisition. Board independence, audit committee independence, CEO‐Chairman separation, stock compensation, and equal treatment of minority shareholders serve as potential channels to demonstrate the bidder's higher governance after the acquisition. Our findings also reveal that bidders with governance improvement are also associated with higher operating performance. We extend the portability theory of Ellis et al. (2017) and suggest that governance can also travel from targets to bidders through mergers and acquisitions.
Item Type: | Article |
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Uncontrolled Keywords: | firm corporate governance; mergers and acquisitions; operating performance; reverse portability |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 14 Feb 2024 14:58 |
Last Modified: | 30 Oct 2024 21:27 |
URI: | http://repository.essex.ac.uk/id/eprint/37814 |
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Filename: Financ Manag Account - 2024 - Hussain - Enhancing corporate governance quality through mergers and acquisitions.pdf
Licence: Creative Commons: Attribution 4.0