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Board governance and acquirers’ returns: A study of Australian

acquisitions
Winson Chan, David Emanuel

First Published August 25, 2011 Research Article


Article information

Abstract

This paper examines the relation between acquirer (abnormal) returns and governance
characteristics of the board of directors of the acquiring firm. The central question is:
Are higher (acquirer) abnormal returns associated with ‘better’ board governance,
having controlled for other factors that can affect returns? As acquisitions represent a
significant change in the acquirer’s corporate structure and operations, the determinants
of a successful acquisition are of considerable importance. We examine the relation
between returns and governance variables using a sample of 80
Australian acquisitionsthat occurred between 1999 and 2005. We use both short-run
and long-run (abnormal) returns to capture the wealth effects of the acquisitions. We
find very limited evidence of a connection between our governance variables and
acquirer returns.

JEL Classification:

G14, G34.

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