Using firm level data from India, we examine the impact of ownership concentration on post-M&A performance of firms. Our analysis has implications for both the M&A literature, which emphasises the role of agency conflict between managers and owners of widely held companies as a key reason for M&A failures, and the corporate governance literature, especially in the context of emerging market economies. A cautious interpretation of our results suggests that while ownership concentration may reduce the manager–owner agency conflict, it may nevertheless precipitate other forms of agency conflict such that ownership concentration may not necessarily improve post-M&A performance. In particular, our results have implications for the literature on the agency conflict between large (or majority) shareholders and small (or minority) shareholders of a company, especially in contexts such as emerging market economies where corporate governance quality is weak.
Bibliographical noteNOTICE: this is the author’s version of a work that was accepted for publication in Journal of corporate finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Bhaumik, S & Selarka, E, 'Does ownership concentration improve M&A outcomes in emerging markets? Evidence from India' Journal of corporate finance, vol. 18, no. 4 (2012) DOI http://dx.doi.org/10.1016/j.jcorpfin.2012.04.001
- mergers and acquisitions
- emerging markets
- firm performance
- corporate governance