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Unveiling the Nexus: Exploring the Impact of Corporate Governance on the Financial Performance of Acquiring Companies in the Indian Context

Author

Listed:
  • Debi Prasad Satapathy

    (Symbiosis Centre for Management Studies, Nagpur Campus, Symbiosis International (Deemed University), Pune 412115, India)

  • Tarun Kumar Soni

    (Finance Area, FORE School of Management, New Delhi 110016, India)

  • Pramod Kumar Patjoshi

    (Finance Area, Centurion University of Technology and Management, R.Sitapur 761211, India)

Abstract
This study investigates the effect of corporate governance characteristics on the financial performance of 124 listed Indian companies that have undergone mergers and acquisitions between 2014 and 2020. It employs several performance measures, such as short-term capital market performance, long-term capital market performance, accounting- and market-based measures, and firm-level control factors. The study finds board size to be a positive and significant factor affecting short-term market performance. Furthermore, it also documents weak linkages with other corporate governance variables, such as board independence and CEO duality. Regarding control variables, leverage, company age, price-to-book ratio, and research and development expenses significantly impact acquiring companies’ financial returns. The findings add to our understanding of corporate governance’s impact on performance in cases such as mergers and acquisitions.

Suggested Citation

  • Debi Prasad Satapathy & Tarun Kumar Soni & Pramod Kumar Patjoshi, 2023. "Unveiling the Nexus: Exploring the Impact of Corporate Governance on the Financial Performance of Acquiring Companies in the Indian Context," JRFM, MDPI, vol. 17(1), pages 1-19, December.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2023:i:1:p:13-:d:1308128
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    References listed on IDEAS

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    1. repec:eme:mfppss:v:41:y:2015:i:3:p:244-266 is not listed on IDEAS
    2. Bengt Holmstrom & Steven N. Kaplan, 2001. "Corporate Governance and Merger Activity in the United States: Making Sense of the 1980s and 1990s," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 121-144, Spring.
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