Corporate Governance Convergence Through Cross-Border Mergers: The Case of Aventis

38 Pages Posted: 6 Sep 2004

See all articles by Christos Cabolis

Christos Cabolis

IMD; Yale SOM International Center for Finance

Arturo Bris

IMD International; European Corporate Governance Institute (ECGI); Yale University - International Center for Finance

Date Written: November 2004

Abstract

In this paper we illustrate the role of cross-border mergers in the process of corporate governance convergence. We explore in detail the corporate governance provisions in Rhone-Poulenc, a French company, and Hoechst, a German firm, and the resulting structure after the two firms merged in 1999 to create Aventis, legally a French corporation. We show that, despite the nationality of the firm, the corporate governance structure of Aventis is a combination of the corporate governance systems of Hoechst and Rhone-Poulenc, where the newly merged firm adopted the most protective provisions of the two merging firms. In some cases this resulted in Aventis' borrowing from the corporate governance structure of Hoechst while in others Aventis replicated Rhone-Poulenc's structure. Most interesting is the situation where Aventis introduced improved provisions over both systems. The resulting corporate governance system in Aventis is significantly more protective than the default French legal system of investor protection.

Keywords: corporate governance, cross-border mergers, investor protection

JEL Classification: F3, F4, G3

Suggested Citation

Cabolis, Christos and Bris, Arturo, Corporate Governance Convergence Through Cross-Border Mergers: The Case of Aventis (November 2004). ECGI - Finance Working Paper No. 56/2004; Yale ICF Working Paper No. 04-41. Available at SSRN: https://ssrn.com/abstract=586921 or http://dx.doi.org/10.2139/ssrn.586921

Christos Cabolis (Contact Author)

IMD ( email )

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Yale SOM International Center for Finance ( email )

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Arturo Bris

IMD International ( email )

Ch. de Bellerive 23
P.O. Box 915
CH-1001 Lausanne
Switzerland

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Yale University - International Center for Finance ( email )

Box 208200
New Haven, CT 06520
United States

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