Target corporate governance, acquirers' location choices, and partial acquisitions

Abstract

This paper provides new evidence on the relation between target corporate governance and acquirers' location planning in the context of partial acquisitions. Focusing on East and Southeast Asian countries, we find that both performance and corporate governance aspects are relevant in acquisition planning, with preferences relating to pre-acquisition performance of acquired firms differing across domestic and cross-border bidders. We also find that target corporate governance structure at the time of acquisitions is related to post-acquisition performance outcomes. Our findings are robust to a set of tests involving alternative control samples, and any influence of bidder toehold levels. Overall, the paper suggests a role for firm-level corporate governance as an acquisition motive, and a link between corporate governance reform and wider disciplinary attributes of acquisition location decisions.