Target corporate governance, acquirers' location choices, and partial acquisitions

Dang, Man; Henry, Darren; Yin, Xiangkang; Vo, Thi Thuy Anh

doi:10.1016/j.pacfin.2017.08.001

Cited by 10 publications

(1 citation statement)

References 76 publications

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“…There is a large body of academic literature that examines how private equity portfolio firms have changed postacquisition. This literature has examined effects such as levels of productivity (Davis et al ., ), changes in employment (Davis, ), impact on innovation (Lerner et al ., ), levels of capital investment (Harford and Kolasinski, ), financial distress (Stromberg et al ., ), acquirers’ location (Dang et al ., ), prediction models of firms making a takeover bid (Akhtar, ) and going private (Renneboog et al ., ; Bharath and Dittmar, ).…”

Section: Previous Literature and Hypothesis Developmentmentioning

confidence: 99%

Evidence of governance arbitrage by private equity sponsors

Schofield

2018

Accounting & Finance

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The motivation for private equity bids is not well understood, partly due to the private nature of their activity. This research contributes to understanding the merits of current-day private equity by examining whether ineffective governance of target public corporations contributes to the role that private equity fulfils. I examine the characteristics of large public target firms that receive a private equity bid to investigate the evidence that private equity is motivated to address ineffective governance. I find evidence the private equity is motivated by what is referred to as governance arbitrage and that this role is heightened when there are constraints such as the imposition of uniform governance practices within public corporations.

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