Unveiling the Nexus: Exploring the Impact of Corporate Governance on the Financial Performance of Acquiring Companies in the Indian Context

Debi Prasad Satapathy, Tarun Kumar Soni () and Pramod Kumar Patjoshi
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Debi Prasad Satapathy: Symbiosis Centre for Management Studies, Nagpur Campus, Symbiosis International (Deemed University), Pune 412115, India
Tarun Kumar Soni: Finance Area, FORE School of Management, New Delhi 110016, India
Pramod Kumar Patjoshi: Finance Area, Centurion University of Technology and Management, R.Sitapur 761211, India

JRFM, 2023, vol. 17, issue 1, 1-19

Abstract: This study investigates the effect of corporate governance characteristics on the financial performance of 124 listed Indian companies that have undergone mergers and acquisitions between 2014 and 2020. It employs several performance measures, such as short-term capital market performance, long-term capital market performance, accounting- and market-based measures, and firm-level control factors. The study finds board size to be a positive and significant factor affecting short-term market performance. Furthermore, it also documents weak linkages with other corporate governance variables, such as board independence and CEO duality. Regarding control variables, leverage, company age, price-to-book ratio, and research and development expenses significantly impact acquiring companies’ financial returns. The findings add to our understanding of corporate governance’s impact on performance in cases such as mergers and acquisitions.

Keywords: corporate governance; event study; firm performance; abnormal return; merger and acquisition (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
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