Corporate Governance Transfer and Synergistic Gains from Mergers and Acquisitions

Wang, Cong; Xie, Fei

doi:hhn018

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Corporate Governance Transfer and Synergistic Gains from Mergers and Acquisitions

The Review of Financial Studies, Vol. 22, Issue 2, pp. 829-858, 2009

Posted: 25 Jan 2009

See all articles by Cong Wang

Cong Wang

The Chinese University of Hong Kong, Shenzhen

Fei Xie

University of Delaware - Lerner College of Business and Economics; European Corporate Governance Institute (ECGI)

There are 2 versions of this paper

Date Written: February 2009

Abstract

We present evidence on the benefits of changes in control from mergers and acquisitions. We find that the stronger the acquirer's shareholder rights relative to the target's, the higher the synergy created by an acquisition. This result supports the hypothesis that acquisitions of firms with poor corporate governance by firms with good corporate governance generate higher total gains. We also find that the synergy effect of corporate governance is shared by target shareholders and acquiring shareholders, in that both target returns and acquirer returns increase with the shareholder-rights difference between the acquirer and the target.

Keywords: G34, G14, K22

Suggested Citation: Suggested Citation

Wang, Cong and Xie, Fei, Corporate Governance Transfer and Synergistic Gains from Mergers and Acquisitions (February 2009). The Review of Financial Studies, Vol. 22, Issue 2, pp. 829-858, 2009, Available at SSRN: https://ssrn.com/abstract=1331868 or http://dx.doi.org/hhn018