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Contractual Corporate Governance

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  • Goergen, M.
  • Renneboog, L.D.R.

    (Tilburg University, Center for Economic Research)

Abstract

Companies have the choice to deviate from their national corporate governance standards by opting into another system. They can do so via contractual devices – such as cross-border mergers and acquisitions, (re)incorporations, and cross-listings – which enable firms to choose their preferred level of investor protection and regulation. This paper reviews these three main contractual governance devices, their effect on value, and whether their adoption by firms induces a race to the bottom or a race to the top. Indeed, firms may opt for less shareholder-orientation or investor protection (shareholder-expropriation hypothesis) rather than for more stringent rules that require firms to focus on shareholder value (bonding hypothesis).

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2008-41.

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Date of creation: 2008
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Handle: RePEc:dgr:kubcen:200841

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Web page: http://center.uvt.nl

Related research

Keywords: Contractual corporate governance; corporate governance regulation; cross-border mergers and acquisitions; cross-listings; reincorporations; shareholder protection; creditor protection; spillover effects;

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References

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Citations

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Cited by:
  1. Feito-Ruiz, Isabel & Menéndez-Requejo, Susana, 2011. "Cross-border Mergers and Acquisitions in different legal environments," International Review of Law and Economics, Elsevier, vol. 31(3), pages 169-187, September.
  2. Georgieva, Dobrina & Jandik, Tomas, 2012. "Alternative paths of convergence toward U.S. market and legal regulations: Cross-listing vs. merging with U.S. bidders," Journal of Multinational Financial Management, Elsevier, vol. 22(5), pages 230-251.
  3. Moskalev, Sviatoslav A., 2010. "Foreign ownership restrictions and cross-border markets for corporate control," Journal of Multinational Financial Management, Elsevier, vol. 20(1), pages 48-70, February.
  4. Sudi Sudarsanam & Tim Broadhurst, 2012. "Corporate governance convergence in Germany through shareholder activism: Impact of the Deutsche Boerse bid for London Stock Exchange," Journal of Management and Governance, Springer, vol. 16(2), pages 235-268, May.
  5. Bennedsen, Morten & Nielsen, Kasper Meisner & Nielsen, Thomas Vester, 2012. "Private contracting and corporate governance: Evidence from the provision of tag-along rights in Brazil," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 904-918.

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