Do Foreign Investors Exhibit a Corporate Governance Disadvantage? An Information Asymmetry Perspective

44 Pages Posted: 24 Sep 2009

See all articles by Jun-Koo Kang

Jun-Koo Kang

Nanyang Technological University (NTU) - Nanyang Business School

Jin-Mo Kim

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Date Written: June 1, 2009

Abstract

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

Suggested Citation

Kang, Jun-Koo and Kim, Jin-Mo, Do Foreign Investors Exhibit a Corporate Governance Disadvantage? An Information Asymmetry Perspective (June 1, 2009). Available at SSRN: https://ssrn.com/abstract=1478189 or http://dx.doi.org/10.2139/ssrn.1478189

Jun-Koo Kang

Nanyang Technological University (NTU) - Nanyang Business School ( email )

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Jin-Mo Kim (Contact Author)

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

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