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Corporate governance and merger and acquisition (M&A) FDI: Firm-level evidence from Japanese FDI into the US

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Author Info

  • Alba, Joseph D.
  • Park, Donghyun
  • Wang, Peiming

Abstract

Merger and acquisition (M&A) is a mechanism for promoting corporate governance. This suggests that an improvement in overall corporate governance may have a negative effect on M&A activity. Since M&A foreign direct investment (FDI) is a cross-border variant of M&A, we use firm-level data to investigate the effect of US corporate governance on Japanese M&A FDI. Our results indicate that two landmark corporate governance regulations by the US Securities and Exchange Commission (SEC) in 1992 contributed significantly to the sharp decline in Japanese M&A FDI in the US during the 1990s. Our evidence lends some support to the notion that corporate governance may affect not only domestic M&A activity but also cross-border M&A activity. Our study also sheds some light on the puzzle of why Japanese FDI into the US fell during the 1990s despite the depreciation of the US dollar.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Multinational Financial Management.

Volume (Year): 19 (2009)
Issue (Month): 1 (February)
Pages: 1-11

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Handle: RePEc:eee:mulfin:v:19:y:2009:i:1:p:1-11

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Web page: http://www.elsevier.com/locate/mulfin

Related research

Keywords: Corporate governance Merger and acquisition Foreign direct investment;

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