Adopting Better Corporate Governance: Evidence from Cross-Border Mergers

Bris, Arturo; Brisley, Neil; Cabolis, Christos

doi:10.2139/ssrn.424884

Cited by 43 publications

(37 citation statements)

References 42 publications

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“…In our sample, a one standard deviation increase in cross-border M&A activity is associated with a 12% increase in market-to-book relative to the sample median. This firm-level evidence is consistent with the industry-level evidence in Bris, Brisley, and Cabolis (2008). They find a positive relation between the industry Tobin's Q and the average change in investor protection (difference between acquirer's and target's country investor protection) following a cross-border M&A.…”

Section: Introductionsupporting

confidence: 85%

International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions

Albuquerque

Brandão-Marques

Ferreira³

et al. 2018

The Review of Financial Studies

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We develop and test the hypothesis that foreign direct investment promotes corporate governance spillovers in the host country. Using firm-level data on cross-border mergers and acquisitions (M&A) and corporate governance in 22 countries, we find that cross-border M&As are associated with subsequent improvements in the governance, valuation, and productivity of the target firms' local rivals. This positive spillover effect is stronger when the acquirer is from a country with stronger shareholder protection and if the target's industry is more competitive. We conclude that the international market for corporate control promotes the adoption of better corporate governance practices around the world. JEL Classification Numbers: G32, G34, G38

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Section: Introductionsupporting

confidence: 85%

International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions

Albuquerque

Brandão-Marques

Ferreira³

et al. 2018

The Review of Financial Studies

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“…Rather, the acquisition of majority control of an emergingmarket target is the primary driver of acquirer returns when a cross-border acquisition is announced. One explanation for the result that the acquisition of majority control appears to matter only in emerging markets is that the transfer of majority control may provide a mechanism through which acquirers are able to lend developed-market institutions in the form of improved property rights to emerging-market targets (Acemoglu and Johnson, 2003;Bris and Cabolis, 2004). The findings are as follows.…”

Section: Selection Bias: Do the Acquirers In The Sample Experience Pomentioning

confidence: 91%

“…Moreover, the effect of acquiring control appears more important in R&D-intensive industries where the transfer of proprietary assets is an issue. The transfer of majority control may create value by providing a mechanism through which acquirers are able to lend developed-market institutions to emerging-market targets (Acemoglu and Johnson, 2003;Bris and Cabolis, 2004).…”

Section: Introductionmentioning

confidence: 99%

Acquiring Control in Emerging Markets: Evidence from the Stock Market

2004

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When firms from developed markets acquire firms in emerging markets, market-capitalizationweighted monthly joint returns show a statistically significant increase of 1.8%. Panel data estimations suggest that the value gains from cross-border M&A transactions stem from the transfer of majority control from emerging-market targets to developed market acquirers -joint returns range from 5.8% to 7.8% when majority control is acquired. Announcement returns for acquirer and target firms estimate the distribution of gains and show a statistically significant increase of 2.4% and 6.9%, respectively. The evidence suggests that the stock market anticipates significant value creation from cross-border transactions that involve emerging-market targets leading to substantial gains for shareholders of both acquirer and target firms.

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“…3 3 Rossi and Volpin (2004), Bris and Cabolis (2008), and Bris, Brisley, and Cabolis (2008) provide support for this argument using samples of publicly traded firms. …”

mentioning

confidence: 87%

Determinants of Cross‐Border Mergers and Acquisitions

Erel¹,

Liao

Weisbach³

2012

The Journal of Finance

664

436

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The vast majority of cross-border mergers involve private firms outside of the United States. We analyze a sample of 56,978 cross-border mergers between 1990 and 2007. We find that geography, the quality of accounting disclosure, and bilateral trade increase the likelihood of mergers between two countries. Valuation appears to play a role in motivating mergers: firms in countries whose stock market has increased in value, whose currency has recently appreciated, and that have a relatively high market-to-book value tend to be purchasers, while firms from weaker-performing economies tend to be targets.

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Adopting Better Corporate Governance: Evidence from Cross-Border Mergers

Cited by 43 publications

References 42 publications

International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions

International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions

Acquiring Control in Emerging Markets: Evidence from the Stock Market

Determinants of Cross‐Border Mergers and Acquisitions

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