Corporate governance reforms around the world and cross-border acquisitions
نویسندگان
چکیده
Article history: Received 17 May 2013 Received in revised form 27 May 2013 Accepted 30 May 2013 Available online 10 June 2013 This paper provides comprehensive, detailed documentation of major corporate governance reforms (CGRs) undertaken by 26 advanced and emerging economies. We investigate whether these reforms have altered investor protection (IP) and impacted corporate investments. Specifically, we estimate the CGRs' impacts on foreign acquirers' tendency to pick better performing firms in emerging markets. We argue the cherry picking is partly due to emerging countries' weaker IP than acquirer countries', predicting a positive relation between the degree of cherry picking and the gap in the strength of IP. Thus, if the CGRs strengthen IP, the gap will decrease (increase) following a CGR in a target's (acquirer's) country, moderating (intensifying) the cherry picking tendency. This is what we find when we estimate difference-in-differences in cherry picking before and after a CGR. These results not only demonstrate the important impacts the CGRs had, but also imply the IP gap between capital exporting and importing countries distorts firm-level allocation of foreign capital inflows and reduces the benefits of globalization. © 2013 Elsevier B.V. All rights reserved. JEL classification: F21 G34 K22
منابع مشابه
Cross Border Mergers and Acquisitions by Indian firms-An Analysis of Pre and Post Merger performance
The corporate sector all over the world is restructuring its operations through different types of consolidation strategies like mergers and acquisitions in order to face challenges posed by the new pattern of globalization, which has led to the greater integration of national and international markets.. The intensity of cross-border operations recorded an unprecedented ...
متن کاملInternational Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions
We develop and test the hypothesis that foreign direct investment promotes corporate governance spillovers in the host country. Using firm-level data on cross-border mergers and acquisitions (M&A) and corporate governance in 22 countries, we find that crossborder M&A activity is associated with subsequent improvements in the governance of the target firms’ local rivals. This positive spillover ...
متن کاملMethods of Payments and Cross-Border Acquiring firm Valuation
Consistent with the existing literature in U.S. domestic M&As, the methods of payment also seem to convey information about acquiring firm valuation in cross-border acquisitions. Cash-financing is associated with positive wealth gain upon foreign M&A announcements while equity-financing results in insignificant shareholder wealth increase. The fact that equity-financing does not lead to value l...
متن کاملDoes Corporate International Diversification Destroy Value? Evidence from Cross-Border Mergers and Acquisitions
This paper investigates the valuation effects of corporate international diversification by examining cross-border mergers and acquisitions of U.S. acquirers over the period 1990-1999. We find that, on average, acquisitions of “fairly valued” foreign business units do not lead to value discounts. Consistent with the industrial diversification discount literature, unrelated cross-border acquisit...
متن کاملPreliminary draft, comments welcome MOTIVES FOR DOMESTIC AND CROSS-BORDER ACQUISITIONS: A COMPARATIVE ANALYSIS
Studies examining value creation in cross-border acquisitions are few, and there are none that compare value creation of domestic vs. cross-border acquisitions. Institutional differences (at both the firm and industry level) may, in addition to economic factors, cause systematic differences in the value created by cross border vs. domestic acquisitions, thus affecting a firm’s international com...
متن کامل