Corporate Governance and The Abnormal Returns To Acquisition Announcements


Corporate Governance
Firm Size

How to Cite

Swanstrom, M. (2006). Corporate Governance and The Abnormal Returns To Acquisition Announcements. Journal of Business Strategies, 23(2), 115–130.


This paper investigates the relationship between a firm's corporate governance
structure and the abnormal returns associated with acquisition announcements.
Based on a sample of 294 acquisitions occurring from 1994 through 1998, it is
found that acquiring firms have significant two-day abnormal returns of-2.71%.
A multiple regression model that includes corporate governance variables has an
Adjusted R-squared of 14.2% with board size, the sensitivity of the CEO's wealth
to changes in share price, method ofpayment, and acquiring firm size all being
significant explanatory variables.

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