High-tech acquirers and the moderating role of corporate governance

In this article, we examine the role of corporate governance for improving the perception of Merger & Acquisition (M&A) transactions in the high-tech sector. Based on a sample of transactions initiated by listed French firms, we analyse the impact of corporate governance on the short-term performance of acquisitions. We demonstrate that high-tech firms which are considered to have good governance achieve significantly higher returns. These results are further confirmed when we look exclusively at diversification transactions. In addition, these firms particularly perform better than firms with good governance in other sectors of activity. On the other hand, high-tech firms which are considered to have weak governance perform less well. Lastly, it appears that the acquisition of small innovative companies will generate more value creation.