Corporate Governance and Takeover Outcomes

Research Question/Issue: This article reviews how and through which channels corporate governance shapes takeover outcomes. Research Findings: We summarize the main findings of the empirical literature that investigates the effect of corporate governancemechanisms on takeover outcomes. The internal and external governance mechanisms that we consider are: the board of directors, the takeover market, blockholders, financial markets in general, product market competition, and the labor market. Theoretical/Academic Implications: This article adopts an agency perspective of the firm and reviews the mergers and acquisitions (M&A) literature through the lens of corporate governance.We highlight how the different corporate governancemechanisms affect the takeover process and outcomes. Practitioner/Policy Implications: The article systematizes the current state of the research linking corporate governance and takeovers. In doing so, we emphasize which mechanisms policymakers can use to improve the efficiency of the takeover market. Alternatively, the reviewalso offers indications concerningmechanisms that could be used tomitigate agency conflicts and, as such, increase firm value.