THE IMPACT OF CORPORATE GOVERNANCE PRACTICES ON POST-MERGER PERFORMANCE

Ali İhsan Akgün

doi:10.30798/makuiibf.836627

Abstract

The relation between the post-merger performance and corporate governance mechanism is examined using Linear regression model for a sample of US, Canada, EU-28 and Western European countries listed firms for the period from 2003 to 2012. We also examine as to whether the use of International Financial Reporting Standards (IFRS) improves corporate transparency, therefore, increasing financial reporting quality. Using a sample of banks from international countries, we present the following key findings: post-merger performance is significantly better common law in countries than code law in countries with better IFRS group banks during the post-merger performance. We also find that local GAAP reporting allows a more transparent assessment of financial performance on the basis of traditional indicators making it a superior tool for assessing potential acquisition targets. This study analysis changes in a country legal regulation as a measure of corporate governance and shows that these regulations play an important role in merger activity. Legal origins and owner-protection mechanisms are important in explaining the relationship between the quality of accounting standards and corporate governance practices following IFRS adoption. Overall, our empirical findings result consistent with Ciobanu (2015) find that merger and acquisition is influenced both the legal origin and accounting regulations.

Highlights

Corporate governance mechanisms influence to accounting and financial reporting practices (Anderson et al, 2004)
We examine the relationship between bank merger performance and corporate governance practices across US, Canada, European Union (EU)-28 and Western European countries from 2002 to 2012, finding that corporate governance affected in countries with stronger legal system
The reason why we studied the impact of legal origin on the bank Mergers and acquisitions (M&As) and corporate governance was to show that legal origin has an effect on the M&A process both at the common law countries and code law countries

Summary

Introduction

Corporate governance mechanisms influence to accounting and financial reporting practices (Anderson et al, 2004). Good corporate governance practices suggest that a company should ensure timely and accurate disclosure is made on all material matters (Munisi and Randøy, 2013). La Porta et al (2000) suggest that the quality of accounting standards play a critical role in corporate governance, in particular, bring information to the investor. In this context, the country-level legal origins may be affect corporate governance on banking firms’ accounting standards choices. Role of accounting standards in corporate governance mechanism provide the information needed to measure the business performance (Drever et al, 2007). We add to the literature by providing shed light on the investigating the relationship between corporate governance practices and the post-merger bank performance

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Results

Conclusion