Governance Provisions and Firm Performance during Merger Wave

Abstract : I examine the impact of takeover defences on acquirer performance during merger wave. Previous literature reports poor acquisition performance associated with governance provisions. Using a sample of 4,545 completed deals, I find that the negative relation between takeover defenses and acquisition returns exists only when mergers occur during the period of merger wave. The result in the paper shows that the adverse impact of takeover defenses is conditional on the time period. The finding suggests that the capital market does not fully anticipate the behavior of acquirers during the merger wave driven by the technological and regulatory shocks.