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Corporate Governance Convergence Through Cross-Border Mergers: The Case of Aventis

  • Christos Cabolis
  • Arturo Bris

In this paper we illustrate the role of cross-border mergers in the process of corporate governance convergence. We explore in detail the corporate governance provisions in Rhone-Poulenc, a French company, and Hoechst, a German firm, and the resulting structure after the two firms merged in 1999 to create Aventis, legally a French corporation. We show that, despite the nationality of the firm, the corporate governance structure of Aventis is a combination of the corporate governance systems of Hoechst and Rhone-Poulenc, where the newly merged firm adopted the most protective provisions of the two merging firms. In some cases this resulted in Aventis' borrowing from the corporate governance structure of Hoechst while in others Aventis replicated Rhone-Poulenc's structure. Most interesting is the situation where Aventis introduced improved provisions over both systems. The resulting corporate governance system in Aventis is significantly more protective than the default French legal system of investor protection.

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File URL: http://icfpub.som.yale.edu/publications/2511
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Paper provided by Yale School of Management in its series Yale School of Management Working Papers with number amz2511.

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Date of creation: 01 Sep 2004
Date of revision: 01 Dec 2004
Handle: RePEc:ysm:somwrk:amz2511
Contact details of provider: Web page: http://icf.som.yale.edu/

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  1. RAFAEL LaPORTA & FLORENCIO LOPEZ-de-SILANES & ANDREI SHLEIFER & ROBERT W. VISHNY, . "Legal Determinants of External Finance,"," CRSP working papers 324, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  2. La Porta, Rafael & Lopez-de-Silanes, Florencio & Schleifer, Andrei & Vishny, Robert, 2001. "Investor Protection and Corporate Governance," Working Paper Series rwp01-017, Harvard University, John F. Kennedy School of Government.
  3. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1999. "Investor Protection and Corporate Valuation," Harvard Institute of Economic Research Working Papers 1882, Harvard - Institute of Economic Research.
  4. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert W., 1998. "Law and Finance," Scholarly Articles 3451310, Harvard University Department of Economics.
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