The Value of Investor Protection: Firm Evidence from Cross-Border Mergers

Posted: 26 Jun 2008

See all articles by Arturo Bris

Arturo Bris

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

Christos Cabolis

IMD; Yale SOM International Center for Finance

Multiple version iconThere are 2 versions of this paper

Date Written: April 2008

Abstract

International law prescribes that in a cross-border acquisition of 100% of the target shares, the target firm becomes a national of the country of the acquiror, and consequently subject to its corporate governance system. Therefore, cross-border mergers provide a natural experiment to analyze the effects of changes in corporate governance on firm value. We construct measures of the change in investor protection in a sample of 506 acquisitions from 39 countries. We find that the better the shareholder protection and accounting standards in the acquiror's country, the higher the merger premium in cross-border mergers relative to matching domestic acquisitions.

Keywords: F3, F4, G3

Suggested Citation

Bris, Arturo and Cabolis, Christos, The Value of Investor Protection: Firm Evidence from Cross-Border Mergers (April 2008). Review of Financial Studies, Vol. 21, Issue 2, pp. 605-648, 2008. Available at SSRN: https://ssrn.com/abstract=1151600 or http://dx.doi.org/hhm089

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

IMD ( email )

Ch. de Bellerive 23
P.O. Box 915
CH-1001 Lausanne
Switzerland
+41 21 618 0742 (Phone)
+41 21 618 0707 (Fax)

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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