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Corporate Governance Transfer and Synergistic Gains from Mergers and Acquisitions

Year: 2008

Type: article

Abstract: We present evidence on the benefits of changes in control from mergers and acquisitions. We find that the stronger the acquirer's shareholder rights relative to the target's, the higher the synergy created by an acquisition. This result supports the hypothesis that acquisitions of firms with poor corporate governance by firms with good corporate governance generate higher total gains. We also find that the synergy effect of corporate governance is shared by target shareholders and acquiring shareholders, in that both target returns and acquirer returns increase with the shareholder-rights difference between the acquirer and the target.

Source: Review of Financial Studies

DOI: 10.1093/rfs/hhn018

Authors: Cong Wang, Fei Xie

Institutions: Chinese University of Hong Kong, Chinese University of Hong Kong, Shenzhen, George Mason University, University of Delaware

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

OpenAlex ID: W2084067017

FWCI: 34.8

Cites: 39

Cited by: 319

Related to: 10