Skip to main content

Corporate governance, performance and take-overs: an empirical analysis of UK mergers

Buy Article:

$53.17 plus tax (Refund Policy)


This paper analyses the relationship between the probability of being acquired, firm performance and governance structures. The acquired firms were all fully quoted on the London Stock Exchange and the acquisitions took place between 1990 and 1993. They were matched by a sample of non-acquired quoted companies. The sample was also analysed in terms of hostile and non-hostile acquisitions. It was found that the key governance characteristics which differentiated between acquired and nonacquired corporations related to the proportion of non-executive directors on the board and to whether or not the roles of chief executive officer and chairman were combined. It was also found that acquired firms were poor performers, which suggests that the internal governance structures had been ineffective. These results applied to hostile and non-hostile targets. The findings support the view that hostile acquisitions are disciplinary but cast doubt on the claim that non-hostile acquisitions are purely synergistic. The results also support the view that certain governance characteristics are effective substitutes for the take-over mechanism as a means of minimizing discretionary behaviour.

Document Type: Research Article


Publication date: November 1, 1997

More about this publication?

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more