Corporate governance;
Related party transactions;
Control-ownership divergence;
Tunneling;
Cross-border acquisitions;
India;
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摘要:
Research regards related party transactions (RPTs) and control-ownership divergence (wedge) as expropriation mechanisms manifesting severe agency conflict in emerging markets. Since corporate governance greatly influences firms' investments and strategic behavior, this study examines how different RPTs and the wedge affect cross-border acquisition (CBA) size and returns. In line with agency theory, opportunistic RPTs like loans/guarantees reduce CBA returns. However, operating RPTs are positively related to returns as the market seems to link these RPTs with benefits to firms. The CBA performance of wedge firms varies with RPT types. While loans/guarantees by wedge firms reduce returns due to combined tunneling incentives, operating RPTs impact returns positively, reflecting more economic benefits in wedge firms. The wedge or RPTs are also positively related to CBA size. But increased tunneling incentives restrain wedge firms that give loans/guarantees from large CBAs. Finally, family firms or large group affiliates that provide loans/guarantees or sustain the wedge reduce returns yet make larger CBAs. Overall, agency costs of expropriation mechanisms depend on RPT types and receive further impetus in family firms or group affiliates with extensive intra-group linkages.
机构:
Management Dev Inst, Strateg Management Area, Gurgaon, IndiaTexas A&M Int Univ, A R Sanchez Jr Sch Business, Laredo, TX 78041 USA
Thakur, Vinod
Pattnaik, Chinmay
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机构:
Univ Sydney, Discipline Int Business, Business Sch, Darlington, AustraliaTexas A&M Int Univ, A R Sanchez Jr Sch Business, Laredo, TX 78041 USA
Pattnaik, Chinmay
Jain, Rajesh
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机构:
Indian Inst Management Ranchi, Strategy & Entrepreneurship Area, Ranchi, IndiaTexas A&M Int Univ, A R Sanchez Jr Sch Business, Laredo, TX 78041 USA
机构:
Kobe Univ, Corp Competitiveness Unit, Res Inst Econ & Business Adm, Kobe, Hyogo, JapanKobe Univ, Corp Competitiveness Unit, Res Inst Econ & Business Adm, Kobe, Hyogo, Japan
机构:
Univ Groningen, Fac Econ & Business, Int Business, NL-9700 AB Groningen, NetherlandsUniv Groningen, Fac Econ & Business, Int Business, NL-9700 AB Groningen, Netherlands