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

Pedro Pinto Matos, Rui Albuquerque, Miguel Ferreira () and Luis Brandao-Marques
Authors registered in the RePEc Author Service: Luis Brandao Marques

No 10917, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We test the hypothesis that foreign direct investment promotes corporate governance spillovers in the host country non-target firms. Using firm-level data from 22 countries, we find that cross-border M&A activity is associated with subsequent improvements in the governance of target firms? rivals. The spillover is more pronounced when the acquirer?s country has stronger investor protection than the target?s country, and when the target operates in a competitive industry. Cross-border M&As also lead to increases in valuation and reductions in overinvestment of non-target firms. Our results suggest that the international market for corporate control promotes functional convergence in corporate governance.

Keywords: Corporate governance; Cross-border mergers and acquisitions; Foreign direct investment; Spillovers (search for similar items in EconPapers)
JEL-codes: G32 G34 G38 (search for similar items in EconPapers)
Date: 2015-11
New Economics Papers: this item is included in nep-cfn, nep-ifn and nep-int
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Related works:
Journal Article: International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions (2019)
Working Paper: International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions (2013)
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