Abstract

http://ssrn.com/abstract=2309117
 
 

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International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions


Rui A. Albuquerque


Boston University - School of Management; Católica-Lisbon School of Business and Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Miguel A. Ferreira


Nova School of Business and Economics; European Corporate Governance Institute (ECGI)

Luis Brandao Marques


International Monetary Fund - Monetary and Capital Markets Department

Pedro P. Matos


University of Virginia - Darden School of Business; European Corporate Governance Institute (ECGI)

January 2014

European Corporate Governance Institute (ECGI) - Finance Working Paper No. 390/2014
Darden Business School Working Paper No. 2309117

Abstract:     
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 effect is more pronounced when the acquirer firm is from a country with stronger shareholder protections and if the target firm operates in a more competitive industry. Additionally, cross-border M&As improve the valuation and productivity of the target firms’ rivals. Our results suggest that the international market for corporate control promotes the adoption of better corporate
governance practices around the world.

Number of Pages in PDF File: 54

Keywords: Foreign direct investment, Corporate governance, Cross border mergers and acquisitions, Spillovers

JEL Classification: G32, G34, G38

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Date posted: August 13, 2013 ; Last revised: January 16, 2014

Suggested Citation

Albuquerque, Rui A. and Ferreira, Miguel A. and Brandao Marques, Luis and Matos, Pedro P., International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions (January 2014). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 390/2014; Darden Business School Working Paper No. 2309117. Available at SSRN: http://ssrn.com/abstract=2309117 or http://dx.doi.org/10.2139/ssrn.2309117

Contact Information

Rui A. Albuquerque
Boston University - School of Management ( email )
595 Commonwealth Avenue
Boston, MA MA 02215
United States
HOME PAGE: http://people.bu.edu/ralbuque/
Católica-Lisbon School of Business and Economics ( email )
Caminho da Palma de Cima
Lisbon, 1649-023
Portugal
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI) ( email )
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Miguel Almeida Ferreira (Contact Author)
Nova School of Business and Economics ( email )
Campus de Campolide
Lisbon, 1099-032
Portugal
European Corporate Governance Institute (ECGI) ( email )
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Luis Brandao Marques
International Monetary Fund - Monetary and Capital Markets Department ( email )
700 19th Street, N.W.
Washington, DC 20431
United States
2026238308 (Phone)
2025898308 (Fax)
Pedro P. Matos
University of Virginia - Darden School of Business ( email )
University of Virginia
P.O. Box 6550
Charlottesville, VA 22906-6550
United States
European Corporate Governance Institute (ECGI) ( email )
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
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