Hussain, Tanveer and Tunyi, Abongeh A and Agyemang, Jacob (2023) Corporate governance transfers: the case of mergers and acquisitions. International Journal of Disclosure and Governance. DOI https://doi.org/10.1057/s41310-023-00217-0
Hussain, Tanveer and Tunyi, Abongeh A and Agyemang, Jacob (2023) Corporate governance transfers: the case of mergers and acquisitions. International Journal of Disclosure and Governance. DOI https://doi.org/10.1057/s41310-023-00217-0
Hussain, Tanveer and Tunyi, Abongeh A and Agyemang, Jacob (2023) Corporate governance transfers: the case of mergers and acquisitions. International Journal of Disclosure and Governance. DOI https://doi.org/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 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.</jats:p>
Item Type: | Article |
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Uncontrolled Keywords: | Firm corporate governance; Combined firm; Mergers and acquisitions; Portability theory; Operating performance |
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: | 12 Apr 2024 11:37 |
Last Modified: | 14 Apr 2024 16:53 |
URI: | http://repository.essex.ac.uk/id/eprint/37439 |
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Licence: Creative Commons: Attribution 4.0