Journal article
Corporate governance dynamics and wealth effects: evidence from large loss acquisitions and large gain acquisitions in the USA
Corporate governance (Bradford), v 19(2), pp 353-371
01 Apr 2019
Abstract
Purpose When major reallocations of the firm's assets are strategically necessary, the corporation's decision system is perhaps put to its severest test. This paper aims to argue that a relevant balance in the corporate governance structure is highly important to assure those strategic decisions taken are successful and economically beneficial to shareholders' wealth. Design/methodology/approach This study examines US firms making major acquisitions resulting in large losses or large gains and identify weaknesses and strengths in their respective governance structures. Findings Firms making large loss acquisitions demonstrate a balance in the corporate governance structure that heavily favors the CEO. Firms making large gain acquisitions present a more efficient balance in the configuration their corporate governance dynamics. Finally, the authors present evidence that making a major acquisition triggers rebalancing of the corporate governance dynamics to increase the effectiveness of monitoring the implementation of the acquisition. The authors find firms making large loss acquisitions make more extensive changes in the professional expertise on their boards. Originality/value This study provides a broad understanding of the role of corporate governance by examining overall governance dynamics and offers how one corporate governance structure does not fit all firms, at all times, in all circumstances. Instead, timely imbalances within the configurations of corporate governance dynamics over the major strategic acquisition process can be consistent with the goal of increasing shareholders' wealth.
Metrics
Details
- Title
- Corporate governance dynamics and wealth effects: evidence from large loss acquisitions and large gain acquisitions in the USA
- Creators
- Seung Hee Choi - Coll New Jersey, Sch Business, Dept Finance, Ewing, NJ 08618 USASamuel H. Szewczyk - Drexel UniversityManeesh Chhabria - Product Innovation and Engineering (United States) (United States, Saint James) - LLC
- Publication Details
- Corporate governance (Bradford), v 19(2), pp 353-371
- Publisher
- Emerald Group Publishing
- Number of pages
- 19
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000463190800007
- Scopus ID
- 2-s2.0-85056455179
- Other Identifier
- 991019169550604721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business