Agents And Structures In Cross Border Governance PDF Download

Cross-border acquisitions have become an important part of the arsenal of strategies that firms deploy in internationalizing their operations. With the significant resources that are generally involved in such transactions and the wide range of performance outcomes, it is important that research examine the factors that contribute to the performance of such acquisitions. My study seeks to do that. By drawing primarily on agency theory, I examine the role of firm governance in the creation of value from the perspective of shareholders at U.S. acquiring firms in international acquisitions. Further, guided by the tenets of transaction cost economics and resource dependency theory, I examine whether the relationships between different firm governance mechanisms and shareholder value creation are contingent on key environmental and firm factors. Study findings indicate that the presence of certain governance mechanisms facilitate the realization of shareholder value from the standpoint of bidding firms. Specifically, firms with larger boards, longer outside director tenure, and greater inside and outside director ownership were associated with superior acquisition performance. However, contrary to agency theory predictions, my results indicate that that CEO influence has a positive impact on bidder returns. In addition, my findings indicate that the relationship between firm governance and shareholder value creation is contingent on certain contextual factors. For example, bidding firms with limited cross-border acquisition experience benefit from the presence of outside directors with longer tenures in the creation of shareholder value. My study has important implications for both the theory and managerial practice. From a theoretical perspective, its contribution lies in the development of arguments linking firm governance structures and shareholder returns in cross-border acquisitions. From an empirical perspective, my study employs the BHAR methodology in the assessment long-terms wealth effects and, thereby, emphasizes the usefulness of this methodology in the examination of value creation related to other key strategic decisions. In addition, my study highlights the importance of using multiple theoretical perspectives in the study of a complex phenomenon such as cross-border acquisitions. While agency theory remains the dominant theory in the study of the effects of corporate governance, my findings suggest that it needs to be complemented by other theoretical perspectives such as stewardship and resource dependency theories. Finally, from a managerial standpoint, I expect my findings to provide guidance to firms interested cross-border acquisitions. While transactional attributes are undoubtedly important, my findings indicate that it is also important to consider managerial interests and the role of governance structures in ensuring that value is maximized in such transactions.