The Linkage Between the Characteristics of Corporate Governance and the Effectiveness of Mergers and Acquisitions

This master's thesis examines the relationship between corporate governance factors and the effectiveness of mergers and acquisitions. The empirical analysis is based on data on mergers and acquisitions from the Refinitive Eikon database and the annual reports of the purchasing companies. As a result, the study was conducted on the basis of a sample of 164 transactions between companies in the US market in the period from 2010 to 2020. As a measure of the effectiveness of mergers and acquisitions, the accumulated abnormal return calculated by the event analysis method was used. Three types of short event windows were used in the event analysis, each of which lasted 5, 7, and 11 days, respectively, and 80 trading days were taken as the evaluation period. To answer the research question about the impact of corporate governance factors on CAR, a regression analysis was used. According to the results, three of the five hypotheses put forward were confirmed. The results were compared with previous researchers and revealed unusual trends in the current realities for the USA market. Thus, among the atypical trends, a positive impact of CEO-duality on CAR was identified; a negative relationship between the number of independent directors and the effectiveness of M&A transactions and a negative proportion of women is observed. As for the directions of future research, in addition to the selected indicator of the effectiveness of mergers and acquisitions in the form of CAR, it is also worth considering several other indicators of completed transactions, such as evaluating the company's financial performance and/or analyzing surveys of senior management to improve the quality of evaluating the results obtained. As for limitations of this work, it is worth noting the calculation of the cumulated abnormal returns only for the buyer's company, as well as the focus on the characteristics of the board of directors among the factors of corporate governance.