Characteristics predominant of corporate governance mechanisms and post-merger and acquisition performance in Brazil

Abstract

This study aimed to identify the predominant characteristics of corporate governance and performance of companies that conducted mergers and acquisitions with change of control between 2006 and 2010. The main theoretical issues addressed were corporate governance, mergers and acquisitions, merger agency problems, and acquisitions and the performance of companies measured by the Graham Filters. The study characterizes the objective as descriptive, regarding the approach of the quantitative problem and in relation to the procedures it is considered as a documentary research. The intentionally constituted sample consisted of 42 companies. The results obtained with the application of the average difference between the pre- and post-merger and acquisition periods show an increase in the mechanisms of corporate governance: external members, size of the Board of Directors, and size and mandate of the fiscal council. The results of the logistic regression indicate that the predominant characteristics were: company performance, indebtedness and the presence of the governance mechanism – institutional investor, which were present in the period after mergers and acquisitions. The conclusion is that the companies’ superior performance by the Graham Filters, coupled with the increase of some specific corporate governance mechanisms, tend to assist in the monitoring of managers by the shareholders, which contribute to the alignment of interests of the principal and agent, reducing the problems after mergers and acquisitions.