Login (DCU Staff Only)
Login (DCU Staff Only)

DORAS | DCU Research Repository

Explore open access research and scholarly works from DCU

Advanced Search

Firm size, sovereign governance, and value creation: evidence from the acquirer size effect

Humphery-Jenner, Mark and Powell, Ronan (2014) Firm size, sovereign governance, and value creation: evidence from the acquirer size effect. Journal of Corporate Finance, 57 . pp. 57-77. ISSN 0929-1199

This paper examines the relationship between acquirer size, sovereign governance, and value-creation in acquisitions. Prior literature indicates that larger acquirers’ acquisitions create less shareholder wealth in developed markets, arising primarily from agency and entrenchment problems. However, in weak governance environments, size might have off-setting benefits, including increased market power and political connections. We use a sample of 17,647 takeovers from 45 countries to examine the acquirer size effect around the world. We find that the acquirer size effect exists internationally, but is smaller in magnitude in weak governance markets. Compared with larger acquirers in strong governance countries, large acquirers in weak governance countries do takeovers that generate higher stock-returns and increase post-takeover operating performance. Their deals are also more likely to be friendly, and take less time to complete. We also find that the benefits of larger acquirer size increase with the importance of political connections in the acquirer’s country. The results suggest that country-governance can moderate the impact of corporate characteristics, such as corporate size.
Item Type:Article (Published)
Uncontrolled Keywords:Governance; Regulation; Takeovers; Size-Effect
DCU Faculties and Centres:DCU Faculties and Schools > DCU Business School
Official URL:http://dx.doi.org/10.1016/j.jcorpfin.2014.02.009
Copyright Information:© 2014 Elsevier
Use License:This item is licensed under a Creative Commons Attribution-NonCommercial-Share Alike 3.0 License. View License
ID Code:21745
Deposited On:16 Mar 2017 15:49 by Thomas Murtagh . Last Modified 19 Jul 2018 15:10

Full text available as:

[thumbnail of ronan_powell.pdf]
PDF - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader


Downloads per month over past year

Archive Staff Only: edit this record