Abstract

http://ssrn.com/abstract=987113
 
 

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Corporate Governance Transfer and Synergistic Gains from Mergers and Acquisitions


Cong Wang


The Chinese University of Hong Kong (CUHK) - Department of Finance

Fei Xie


Clemson University


Review of Financial Studies, Forthcoming

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.

Number of Pages in PDF File: 49

Keywords: Corporate Governance, Mergers and Acquisitions, Synergy, Efficiency Gains

JEL Classification: G34, G14

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Date posted: May 18, 2007 ; Last revised: October 29, 2007

Suggested Citation

Wang, Cong and Xie, Fei, Corporate Governance Transfer and Synergistic Gains from Mergers and Acquisitions. Review of Financial Studies, Forthcoming. Available at SSRN: http://ssrn.com/abstract=987113

Contact Information

Cong Wang (Contact Author)
The Chinese University of Hong Kong (CUHK) - Department of Finance ( email )
Shatin, N.T.
Hong Kong
(852)26961913 (Phone)
(852)26036586 (Fax)
Fei Xie
Clemson University ( email )
101 Sikes Ave
Clemson, SC 29634
United States
(864) 656-0774 (Phone)
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