National Corporate Governance Institutions and Post-Acquisition Target Reorganization

53 Pages Posted: 4 Nov 2008 Last revised: 26 Dec 2011

See all articles by Laurence Capron

Laurence Capron

INSEAD - Strategy

Mauro F. Guillen

University of Pennsylvania - Management Department

Date Written: November 3, 2008

Abstract

We examine the characteristics of national systems of corporate governance to theorize about the nature of the shareholders' and employees' interests when it comes to reorganization, under the assumption that the firm is coalitional in nature. We argue that corporate governance institutions prevalent in the countries of origin of the merging firms enable or constrain the ability of the acquirer to reorganize the target. Using a cross-national dataset of corporate acquisitions and post-acquisition reorganization, we found support for our predictions that stronger legal protection of shareholder rights in the acquirer country compared to the target country increases the acquirer's ability to restructure the target's assets and leverage the target's resources, while the protection of employee rights in the target country restricts the acquirer's ability to restructure the target's assets and transfer resources to and from the target.

Keywords: Mergers and Acquisitions, Post-merger Restructuring, National Governance Systems, Governance Institutions, Institutional Environment, Stakeholders

Suggested Citation

Capron, Laurence and Guillen, Mauro Federico, National Corporate Governance Institutions and Post-Acquisition Target Reorganization (November 3, 2008). INSEAD Working Paper No. 2008/66/ST/ACGRE. Available at SSRN: https://ssrn.com/abstract=1295188 or http://dx.doi.org/10.2139/ssrn.1295188

Laurence Capron (Contact Author)

INSEAD - Strategy ( email )

Boulevard de Constance
77305 Fontainebleau
France
+33 1 60 74 55 08 (Phone)

Mauro Federico Guillen

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
215-573-6267 (Phone)
215-326-3205 (Fax)

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