MERGERS THAT CREATE VALUEDownload This Article
This study uses the governance and operating characteristics of acquirer and target firms to investigate which mergers are profitable, and I find that mergers between well-governed acquirers and poorly governed targets are profitable. In comparison with poorly governed acquirers, well-governed firms acquire targets with lower capital intensity and higher employee intensity. The employee productivity of well-governed acquirers increases after mergers as a result of an increase in the number of employees, combined with an even larger increase in sales. Surprisingly, mergers between poorly governed acquirers and well-governed targets result in the largest increases in operating performance.
Keywords: Mergers and Acquisitions, Governance, Ownership, Operating Performance
How to cite this paper: Baxamusa, M. (2008). Mergers that create value. Corporate Ownership & Control, 5(4-1), 204-218. http://doi.org/10.22495/cocv5i4c1p5