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

Listed author(s):
  • Rui Albuquerque
  • Luis Brandao-Marques
  • Miguel A. Ferreira
  • Pedro Matos

We develop and test the hypothesis that foreign direct investment promotes corporate governance spillovers in the host country. Using firm-level data on cross-border mergers and acquisitions (M&A) and corporate governance in 22 countries, we find that cross-border M&As are associated with subsequent improvements in the governance, valuation, and productivity of the target firms’ local rivals. This positive spillover effect is stronger when the acquirer is from a country with stronger shareholder protection and if the target’s industry is more competitive. We conclude that the international market for corporate control promotes the adoption of better corporate governance practices around the world.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 13/234.

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Length: 41
Date of creation: 12 Nov 2013
Handle: RePEc:imf:imfwpa:13/234
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