The influence of corporate governance on long-term value creation through M&A in Europe

Abstract

This thesis investigates the influence of Corporate Governance mechanisms on M&A performance. The objective is to establish a relationship between these mechanisms and M&A success through correlation and regression analyses. Seven independent variables related to Corporate Governance are examined. M&A performance is proxied by the Economic Value Added (EVA) approach over a three-year period following the M&A effective fusion date. The model was introduced and developed by Bennet Stewart and Joel Stern in the 1980s. The sample includes 93 European transactions that occurred between January 2010 and December 2017. The regression results reveal statistically significant relationships between corporate governance and M&A performance, while also providing evidence of CEO hubris as a destructive force in M&A, suggesting that CEOs may negatively impact M&A outcomes. However, the overall influence of Corporate Governance mechanisms on M&A performance is not conclusively supported by the findings in this paper