Operating Performance Changes Associated with Corporate Mergers and the Role of Corporate Governance

48 Pages Posted: 5 Jun 2010

See all articles by Nicholas F. Carline

Nicholas F. Carline

Department of Finance, Birmingham Business School, University of Birmingham

Scott C. Linn

University of Oklahoma - Michael F. Price College of Business

Pradeep K. Yadav

University of Oklahoma Price College of Business

Date Written: March 19, 2009

Abstract

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

Carline, Nicholas F. and Linn, Scott C. and Yadav, Pradeep K., Operating Performance Changes Associated with Corporate Mergers and the Role of Corporate Governance (March 19, 2009). Journal of Banking & Finance, Vol. 33, No. 10, pp. 1829-1841, October 2009, Available at SSRN: https://ssrn.com/abstract=1558546

Nicholas F. Carline

Department of Finance, Birmingham Business School, University of Birmingham ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

Scott C. Linn (Contact Author)

University of Oklahoma - Michael F. Price College of Business ( email )

307 West Brooks
Norman, OK 73019-4004
United States
405-325-3444 (Phone)
405-325-1957 (Fax)

Pradeep K. Yadav

University of Oklahoma Price College of Business ( email )

307 W.Brooks, Room 3270 Division of Finance
Norman, OK 73019
United States
4053255591 (Phone)
4053255491 (Fax)

HOME PAGE: http://www.ou.edu/price/finance/faculty/pradeep_yadav.html

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