Do Foreign Investors Exhibit a Corporate Governance Disadvantage? An Information Asymmetry Perspective
44 Pages Posted: 24 Sep 2009
Date Written: June 1, 2009
This paper examines whether the governance role of foreign block acquirers in U.S. targets is different from that of domestic block acquirers. We find that foreign block acquirers are less likely to engage in post-acquisition governance activities in U.S. targets than domestic control block acquirers. Among foreign block acquirers, those who have fewer information disadvantages are more likely to engage in post-acquisition governance activities in U.S. targets. Our results suggest that information asymmetries that foreign acquirers face in the host country are an important determinant of their governance activities in domestic targets.
Keywords: Cross-Border Investments; Information; Governance
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