Corporate Governance Convergence in the European M&A Market

20 Pages Posted: 13 Aug 2015 Last revised: 5 Dec 2018

See all articles by Wolfgang Drobetz

Wolfgang Drobetz

University of Hamburg

Paul P. Momtaz

University of California, Los Angeles (UCLA) - Anderson School of Management; University College London Center for Blockchain Technologies

Date Written: December 3, 2018

Abstract

Cross-border acquisitions lead to significant improvements in shareholder rights and more dispersed ownership structures in a large sample of intra-European takeovers. This is evidence of corporate governance convergence toward the Anglo-Saxon system through cross-border takeovers. However, we find no support for the corporate governance motive hypothesis in cross-border acquisitions even after accounting for potential sample selectivity. Although acquirers have significantly better shareholder rights than their targets, there are no robust and significant marginal bidder wealth effects for firms that acquire either weaker or stronger governance foreign targets. Instead, bidder wealth effects in cross-border acquisitions are better explained by acculturation costs.

Keywords: Mergers and acquisitions, market for corporate control, cross-border acquisitions, corporate governance, investor protection, shareholder rights, acquirer returns, bidder wealth effects

JEL Classification: G30, G34

Suggested Citation

Drobetz, Wolfgang and Momtaz, Paul P., Corporate Governance Convergence in the European M&A Market (December 3, 2018). Available at SSRN: https://ssrn.com/abstract=2642487 or http://dx.doi.org/10.2139/ssrn.2642487

Wolfgang Drobetz (Contact Author)

University of Hamburg ( email )

Moorweidenstrasse 18
Hamburg, 20148
Germany

Paul P. Momtaz

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

University College London Center for Blockchain Technologies ( email )

UCL CBT UCL Computer Science
Malet Place London WC
London, London
United Kingdom

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