Abstract

http://ssrn.com/abstract=321101
 
 

References (47)



 
 

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Corporate Governance Convergence by Contract: Evidence from Cross-Border Mergers


Arturo Bris


IMD International; European Corporate Governance Institute (ECGI); Yale University - International Center for Finance

Christos Cabolis


ALBA Graduate Business School; Yale SOM International Center for Finance

September 2002

Yale ICF Working Paper No. 02-32

Abstract:     
Cross-border mergers allow firms to alter the level of protection they provide to their investors, because target firms usually import the corporate governance system of the acquiring company. This article extends the existing literature by evaluating the effect of changes in corporate governance induced by cross-border mergers on industry value, instead of focusing on cross-country comparisons. We construct measures of the change in investor protection induced by cross-border mergers in a sample of 9,277 industry-country-year observations. We find that the Tobin's Q of an industry increases when firms within the industry are acquired by foreign firms coming from countries with better corporate governance. In addition, we show that acquisitions of firms in countries with less protective regimes--French and German legal origin--have a negative impact on the acquiror's value. Conversely, target industries benefit from acquisitions by firms from countries with better corporate governance--English and Scandinavian legal origin. Ours is among the first studies to document in a panel-data framework that improving investor protection creates value.

Number of Pages in PDF File: 54

Keywords: Corporate Governance, Market Regulation, Cross-border Acquisitions

JEL Classification: F3, F4, G3

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Date posted: September 2, 2002  

Suggested Citation

Bris, Arturo and Cabolis, Christos, Corporate Governance Convergence by Contract: Evidence from Cross-Border Mergers (September 2002). Yale ICF Working Paper No. 02-32. Available at SSRN: http://ssrn.com/abstract=321101

Contact Information

Arturo Bris (Contact Author)
IMD International ( email )
Ch. de Bellerive 23
P.O. Box 915
CH-1001 Lausanne
Switzerland
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Yale University - International Center for Finance ( email )
Box 208200
New Haven, CT 06520
United States
Christos Cabolis
ALBA Graduate Business School ( email )
6-8 Xenias Street
Athens, 115 28
Greece
+30 210 896 4531 (Phone)
+30 210 896 4737 (Fax)
HOME PAGE: http://www.alba.edu.gr/faculty/Pages/Cabolis.aspx
Yale SOM International Center for Finance ( email )
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-7108 (Phone)
203-432-8931 (Fax)
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