Corporate Governance and Its Impact on Mergers and Acquisitions
Abstract
Mergers and acquisitions (M&A) are activities that have shown a growing trend word wide in the 21st century. There are several factors that explain the financial performance of firms entering into an M&A deal. One of them is corporate governance. In this context, this paper empirically investigates the effect of corporate governance on the performance of mergers and acquisitions with reference to India. Selecting a sample of 15 Indian companies listed on Bombay Stock Exchange (BSE) that entered into an M&A deal in 2011-12, it explores the relationship between their corporate governance characteristics and financial performance pre and post merger. It is found that corporate governance has a significant effect on M&A performances. In particular, the empirical findings of the paper indicate that market capitalization of M&A performance is significantly influenced by the size of the audit committees of the companies involved in the M&A deals.
