International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions
IMF Working Papers, November 12, 2013
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- International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions
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Bibliographic details
- Authors: Rui Albuquerque, Miguel A. Ferreira, Pedro Matos
- Published: November 12, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475518382.001
Authors and publication
- By Rui Albuquerque, Miguel A. Ferreira, Pedro Matos
- November 12, 2013
- IMF Working Papers, Working Paper No. 2013/234
- Pages: 41
- Volume: 2013
- Issue: 234
- DOI: https://doi.org/10.5089/9781475518382.001
- Stock No: WPIEA2013234
- ISBN: 9781475518382
- ISSN: 1018-5941
Research question and hypothesis
- Hypothesis: Foreign direct investment promotes corporate governance spillovers in the host country.
- Empirical focus: Whether cross-border mergers and acquisitions (M&A) are associated with improvements in governance, valuation, and productivity of target firms’ local rivals.
Data and scope
- Firm-level data on cross-border mergers and acquisitions and corporate governance.
- Coverage: 22 countries.
Key findings
- Cross-border M&As are associated with subsequent improvements in:
- Governance of target firms’ local rivals.
- Valuation of target firms’ local rivals.
- Productivity of target firms’ local rivals.
- The positive spillover effect is stronger when:
- The acquirer is from a country with stronger shareholder protection.
- The target’s industry is more competitive.
- Conclusion: The international market for corporate control promotes the adoption of better corporate governance practices around the world.
Subjects and keywords
- Subject: Balance of payments, Competition, Corporate governance, Economic sectors, Financial markets, Foreign direct investment, Market capitalization, Production, Productivity
- Keywords: acquirer firm, acquisitions, Competition, Corporate governance, Cross border mergers, cross-border m&a, Foreign direct investment, Global, governance attribute, industry classification, investor protection, Market capitalization, panel regression, Productivity, spillover effect, Spillovers, target firm, WP
Policy implications and interpretation
- Foreign direct investment through cross-border M&A can be a channel for transmitting stronger corporate governance practices to host-country firms.
- Greater investor protection in acquirer countries enhances governance spillovers.
- Competitive industry environments amplify the transmission of governance improvements.
International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions, IMF Working Papers 2013/234