Institutional complementarities and corporate governance: The case of hostile takeover attempts

Abstract

AbstractResearch Question/IssueDo institutions reinforce each other when it comes to shaping the economic and organizational environment? We investigate national institutional complementarities by examining how different types of institutions jointly influence the occurrence of hostile takeover attempts, a practice in corporate governance whose frequency differs across countries. We distinguish among regulative, normative, and cultural‐cognitive institutions and examine how they interact to influence the occurrence of hostile takeover attempts worldwide.Research Findings/InsightsUsing panel data on hostile takeover activity of 45 countries between 1988 and 2016, we find evidence supporting the impact of institutions individually and of institutional complementarities.Theoretical/Academic ImplicationsThis study shows that important corporate governance practices such as hostile takeover attempts are indeed influenced by different aspects of institutional environment. It thus helps us better understand the effectiveness of corporate governance practice across different countries.Practitioner/Policy ImplicationsThis study sheds new light on policies facilitating certain corporate governance practice such as hostile takeovers. It also provides managers with a tool to analyze the prevalence of hostile takeovers in a country.