Does Good Governance Create Value for International Acquirers in Africa: Evidence from US Acquisitions

31 Pages Posted: 19 Apr 2013

See all articles by Narjess Boubakri

Narjess Boubakri

American University of Sharjah - School of Business and Management; HEC Montreal - Department of Finance

Olfa Maalaoui

Bloomberg L.P.; Korea Advanced Institute of Science and Technology (KAIST) - Graduate School of Finance

Thouraya Triki

HEC Montreal

Date Written: 2013

Abstract

Using a sample of US acquisitions in Africa over the last 2 decades, we assess the long term performance of international acquisitions in Africa, and the impact of firm and country level governance characteristics on reported performance. We show that acquirers do not benefit from these transactions. We also find that acquisitions made in countries characterized by strong and impartial legal systems lead to higher returns, while those observed in unstable economies generate lower returns. Interestingly, the level of corruption does not affect reported performance. Previous experience in Africa and the acquirer’s board size seem to be significant determinants of reported performance as well. Our results contrasts with the view that a strong legal framework reduces acquirers’ ability to make large returns by turning around poorly governed firms.

Keywords: Governance, Mergers, Africa, Acquisitions, Financial Performance

JEL Classification: G30, G34, G38

Suggested Citation

Boubakri, Narjess and Maalaoui, Olfa and Maalaoui, Olfa and Triki, Thouraya, Does Good Governance Create Value for International Acquirers in Africa: Evidence from US Acquisitions (2013). Available at SSRN: https://ssrn.com/abstract=2253775 or http://dx.doi.org/10.2139/ssrn.2253775

Narjess Boubakri

American University of Sharjah - School of Business and Management ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

HOME PAGE: http://www.aus.edu

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Olfa Maalaoui (Contact Author)

Korea Advanced Institute of Science and Technology (KAIST) - Graduate School of Finance ( email )

Bloomberg L.P.
731 Lexington Ave
NY, NY 10022
United States

Bloomberg L.P. ( email )

731 Lexington Avenue
New York, NY 10022
United States

Thouraya Triki

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

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