Partial-control versus full-control acquisitions: Does target corporate governance matter? Evidence from eight East and Southeast Asian countries
Man Dang () and
Darren Henry ()
Pacific-Basin Finance Journal, 2016, vol. 40, issue PB, 251-265
In this paper, we expand the understanding of majority acquisitions from the target firm's perspective by testing whether target corporate governance mechanisms can explain the trade-off and outcomes between partial-control and full-control acquisitions across eight East and Southeast Asian countries. We find that bidders tend to prefer partial-control acquired targets with more independent directors, powerful CEOs, and higher block-shareholdings regardless of the target country's economic development level. These governance characteristics also lead to a lower likelihood of achieving actual equity acquisitions compared to unmatched ownership outcomes. Our results support the supply-oriented view that targets are generally reluctant to give up corporate control until the activation of a compulsory acquisition clause. Our findings are also robust to variations in the imposed acquisition threshold in each country.
Keywords: Partial-control acquisitions; Full-control acquisitions; Target firms; Board independence; CEO power; Large shareholders (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:40:y:2016:i:pb:p:251-265
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