International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions
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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.
Series:
Working Paper No. 2013/234
Subject:
Balance of payments Competition Corporate governance Economic sectors Financial markets Foreign direct investment Market capitalization Production Productivity
English
Publication Date:
November 12, 2013
ISBN/ISSN:
9781475518382/1018-5941
Stock No:
WPIEA2013234
Pages:
41
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