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Operating performance changes associated with corporate mergers and the role of corporate governance

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  • Carline, Nicholas F.
  • Linn, Scott C.
  • Yadav, Pradeep K.

Abstract

We find that corporate governance characteristics of acquiring firms (board ownership, board size, and block-holder control) have an economically and statistically significant impact on operating performance changes following mergers. We also show that dispersion of intra-board ownership stakes is an important but heretofore overlooked factor when judging the influence of ownership on the outcomes of corporate choices. Finally, we present evidence that suggests the market sometimes under- or overreacts to merger news when initially revaluing merger partners but corrects any miscalculation following the consummation of the merger. -- Im diesem Papier wird empirisch untersucht, wie firmen-spezifische und transaktions-spezifische Faktoren Änderungen in der industrieadjustierten operationellen Performance in der Zeit vor, während und nach Firmenzusammenschlüssen und Übernahmen beeinflussen. Es werden folgende Faktoren untersucht: Angebotsgröße, Leverage des Bieters, Barreserven des Bieters, Industriesektor des Bieters und des Übernahmeziels, die Zahlungsmethode für den Zusammenschluss, Art der Übernahmen (freundlich oder feindlich), Eigentums- und Governance-Strukturen des Bieters. Die meisten dieser Faktoren werden zum ersten Mal in diesem Kontext untersucht. Die vorliegende empirische Analyse stützt sich auf Daten über Firmenzusammenschlüsse von Firmen in Großbritannien zwischen 1985 und 1994. Daher liefert das Papier auch Evidenz für die ökonomischen Gewinne durch Unternehmenszusammenschlüsse außerhalb der USA. Unsere Ergebnisse zeigen, dass die Performance der zusammengeschlossenen Firmen nach dem Unternehmenszusammenschluss signifikant besser ist als zuvor. Das Ausmaß dieser Performancesteigerung hängt jedoch wesentlich von der Zahlungsmethode ab, die beim Zusammenschluss gewählt wurde, und von der Tatsache, ob die Übernahme freundlich oder feindlich war. Die Änderung der Performance hängt außerdem davon ab, welchen Anteil am Unternehmen der Vorstand besitzt und wie konzentriert das Eigentum in den Händen der externen Eigentümer des Bieters ist.

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Bibliographic Info

Paper provided by University of Cologne, Centre for Financial Research (CFR) in its series CFR Working Papers with number 04-08.

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Date of creation: 2009
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Handle: RePEc:zbw:cfrwps:0408

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Keywords: Mergers; Corporate governance; Operating performance;

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Cited by:
  1. Lu, Wen-Min & Wang, Wei-Kang & Hung, Shiu-Wan & Lu, En-Tzu, 2012. "The effects of corporate governance on airline performance: Production and marketing efficiency perspectives," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 529-544.
  2. Ahn, Seoungpil & Jiraporn, Pornsit & Kim, Young Sang, 2010. "Multiple directorships and acquirer returns," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2011-2026, September.
  3. Shim, Jungwook & Okamuro, Hiroyuki, 2011. "Does ownership matter in mergers? A comparative study of the causes and consequences of mergers by family and non-family firms," Journal of Banking & Finance, Elsevier, vol. 35(1), pages 193-203, January.
  4. Park, Minjung, 2013. "Understanding merger incentives and outcomes in the US mutual fund industry," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4368-4380.
  5. Houssam Bouzgarrou & Patrick Navatte, 2013. "Ownership structure and acquirers performance: Family vs. non-family firms," Post-Print halshs-00801736, HAL.
  6. Chemmanur, Thomas J. & Jordan, Bradford D. & Liu, Mark H. & Wu, Qun, 2010. "Antitakeover provisions in corporate spin-offs," Journal of Banking & Finance, Elsevier, vol. 34(4), pages 813-824, April.

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