Operating Performance Changes Associated with Corporate Mergers and the Role of Corporate Governance
48 Pages Posted: 5 Jun 2010
Date Written: March 19, 2009
We find that corporate governance characteristics of acquiring firms (board ownership, board size, and block-holder control) have an economically and statistically significant impact on operating performance changes following mergers. We also show that dispersion of intra-board ownership stakes is an important but heretofore overlooked factor when judging the influence of ownership on the outcomes of corporate choices. Finally, we present evidence that suggests the market sometimes under- or overreacts to merger news when initially revaluing merger partners but corrects any miscalculation following the consummation of the merger.
Keywords: Mergers, Corporate Governance, Operating Performance
JEL Classification: G34, L25
Suggested Citation: Suggested Citation