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The Value of Investor Protection: Firm Evidence from Cross-Border Mergers

Year: 2008

Type: article

Abstract: International law prescribes that in a cross-border acquisition of 100% of the target shares, the target firm becomes a national of the country of the acquiror, and consequently subject to its corporate governance system. Therefore, cross-border mergers provide a natural experiment to analyze the effects of changes in corporate governance on firm value. We construct measures of the change in investor protection in a sample of 506 acquisitions from 39 countries. We find that the better the shareholder protection and accounting standards in the acquiror's country, the higher the merger premium in cross-border mergers relative to matching domestic acquisitions.

Source: Review of Financial Studies

DOI: 10.1093/rfs/hhm089

Authors: Arturo Bris, Christos Cabolis

Institutions: Yale University, European Corporate Governance Institute, Alba Graduate Business School, The American College of Greece

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

OpenAlex ID: W3123064706

FWCI: 37.05

Cites: 56

Cited by: 472

Related to: 8