Takeovers, market monitoring, and international corporate governance

Abstract

We theoretically and empirically examine the role of international takeover markets in curtailing dominant shareholder moral hazard for firms with higher value-added from acquisitions. In equilibrium, such firms strategically list shares in the markets of their targets and voluntarily dilute dominant shareholder control through capital-raising events to lower their expected acquisition costs. Empirical tests, using a sample of foreign firms cross-listing on U.S. stock exchanges during 1990-2003, support the framework. We find a strong influence of post-listing dilution of dominant shareholder control through capital-raising events on the likelihood of acquisitions and their cost to the acquirers, in both U.S. and non-U.S. markets. Copyright (c) 2008, RAND.

In Search of a Greater Pluralism of Theories and Methods in Governance Research

“…In addition, the study explores the mediating role of strategic choices (i.e., diversification, internationalization, and leverage) in the family control–firm performance relationship. Here, they complement a growing literature that examines strategic participation in international markets by family‐owned or controlling shareholder dominated companies and the subsequent impact on their corporate governance (e.g., Kumar & Ramchand, ). The paper also contributes to the literature that relates ownership structure to financial strategy, such as the choice of leverage (Aslan & Kumar, , ).…”

Does cross-listing facilitate changes in corporate ownership and control?

“…3 See for example, Coffee (1999Coffee ( , 2002, Reese and Weisbach (2002), Doidge et al (2004), Hostak et al (2007), Kumar and Ramchand (2008), Doidge et al (2009b), and Hail and Leuz (2009). 4 Firms that cross-list in the US frequently raise new capital, both in the listing year and in subsequent years.…”

Structuring Corporate Boards for Wealth Protection and/or Wealth Creation: The Effects of National Institutional Characteristics

“…For example, the literature has identified how market for corporate control and average level of ownership concentration vary at the national level (Bozec & Bozec, ; Judge, Gaur, & Muller‐Kahle, ; Kumar & Ramchand, ; Shleifer & Vishny, ). These are indeed important characteristics that should affect governance structure; however, we believe the level of ownership concentration and level of take‐over defenses employed varies by firm choice in which average level characteristics vary by nation.…”