National Corporate Governance Institutions and Post-Acquisition Target Reorganization
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post-merger restructuring
national governance systems
governance institutions
institutional environment
stakeholder theory
Business Administration, Management, and Operations
Business and Corporate Communications
Business Intelligence
Business Law, Public Responsibility, and Ethics
Management Information Systems
Management Sciences and Quantitative Methods
Organizational Behavior and Theory
Strategic Management Policy
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Abstract
We examine the characteristics of national systems of corporate governance to theorize about the nature of the shareholders' and employees' interests when it comes to reorganization, under the assumption that the firm is coalitional in nature. We argue that corporate governance institutions prevalent in both the host and the target country of the merging firms enable or constrain the ability of the acquirer to reorganize the target. Using a cross‐national dataset of corporate acquisitions and post‐acquisition reorganization, we found support for our predictions that stronger legal protection of shareholder rights in the acquirer country compared to the target country increases the acquirer's ability to restructure the target's assets and leverage the target's resources, while the protection of employee rights in the target country restricts the acquirer's ability to restructure the target's assets and redeploy resources to and from the target.