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Author/Editor:
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Rui Albuquerque ; Luis Brandao-Marques ; Miguel A. Ferreira ; Pedro Matos
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Publication Date:
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November 12, 2013
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Electronic Access:
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Free Full text
(PDF file size is 701KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
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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Order a print copy
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Series:
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Working Paper No. 13/234
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Subject(s):
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Foreign direct investment | Corporate governance | Spillovers | Competition
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