Corporate Governance in the Merger of Arcelor and Mittal

Running head: CORPORATE GOVERNANCE
Corporate Governance
Name of the Student:
Name of the University:
Author’s Note

CORPORATE GOVERNANCE
1
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Assessment of Post-Merger Board Structure...............................................................................3
Contribution to Governance by Institutional Investor.................................................................5
Review of Pre-Merger and Post-Merger Situation of ArcelorMittal...........................................6
Conclusion.......................................................................................................................................8
Reference.........................................................................................................................................8

CORPORATE GOVERNANCE
2
Introduction
The assessment would be focusing on merger of the business of Arcelor by Mittal
which are two big companies operating in steel industry. The discussion which is covered would
be focusing on pre-merger and post-merger composition of the board. The merger which has
taken place is hostile in nature and therefore the business would be focusing on the need for
governance in the newly formed business. Corporate governance plays an important role in day
to day management of the business and it regulates the business ensuring that ethical standards
are followed and there is commitment towards the vision and goals of the business (Alluru,
Sankararaman and Tebbe 2016, pp.22-24.). The assessment would further be discussing the
positive and negative impacts which can be identified in case of the new company formed
considering pre-merger and post-merger status for the business.
Discussion
Assessment of Post-Merger Board Structure
Ownership structure is crucial for the determination of the relevant agency costs taking
place in a given firm. In addition to this, the ownership structure also determines the efficiency
and accuracy in decision making process of the business. As per Johnson et al (2000),
Shareholders who have majority holdings in a business can derive private gains by interfering in
the operations of the business (Iordachita 2015). The business of Arcelor was taken over by
Mittal group of companies and the purpose for the merger was to follow the business model of
Mittal group. It is natural that the business structure of ArcelorMittal group would change due to
the merger of the two businesses.