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Corporate Governance Quality of the Acquiring Company as a Factor of Synergy Effect Creation in M&A Deals

Student: Sorvacheva Ekaterina

Supervisor: Alexey S. Makarov

Faculty: Faculty of Economics

Educational Programme: Finance (Master)

Year of Graduation: 2019

Mergers and acquisition are one of the most crucial instruments of inorganic growth strategy. At the same time, according to statistics of mergers and acquisitions, efficiency of merger and acquisition deals from point of view of additional value creation is quite ambiguous. In accordance with foregoing, there is quite a considerable interest in investigating the determinants of synergy effect in mergers and acquisitions. There is a number of empirical research in foreign economical literature, where corporate governance quality indicators of acquirer are used as factors of synergy effect. Currently such an approach is quite new for Russian scientific literature and shows the topic from quite a new angle. Within the framework of this study in order to represent corporate governance quality not common aggregate indicators are used, which involve the combination of some other quantities, such as corporate governance rating, but a separate specific characteristics of corporate governance components. One of the most central and main roles in corporate governance system belongs to board of directors. In this connection, as independent variables of models such board of directors characteristics as quantitative composition and remuneration size at the year of the deal are used. Results of the econometrical research based on 84 Russian merger and acquisition deals during 2010-2016 years approve, that created synergy size has the inverted U-shaped relation dependent on number of board members. Within the framework of the research sample, the most optimal board size is 9 members in it. Furthermore, a significant statistical impact of board of directors’ remuneration has been detected on the synergy effect. Regression models results are confirmed with a number of foreign works and can in future not only find a theoretical application in economical research, but also can bring practical use for acquiring companies in order to plan and forecast the expected synergy effect.

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