Public Relations in Corporate Reorganisation

The development of world economy has given birth to contemporary corporate governance system. As an integral component of commercial activities, mergers and acquisitions play vital role in corporate reorganization (Gaughan, 2017). Positively, they could stimulate management team to optimize corporate structure and association, and further improve business efficiency and productivity. On the contrary, they could divert management team’s attention, hinder the normal operation of companies, and result in the business exposed to unpredictable risks (Bena & Li, 2014).

In business practice, public relations could assist company in building up good image, popularity and reputation, promoting operation, supervision and cohesiveness, rationalizing internal relations and industrial relations, and conducting prompt crisis management to create the best social environment for sustainable corporate development (Young, 2016). In particular, public relations run throughout the process of mergers and acquisitions, of which they could steer the nature, timing and outcome (Ki, Kim & Ledingham, 2015). In other words, public relations could determine whether a merger or acquisition is friendly or hostile, takes longer time or shorter, successful or frustrated. They require all involved stakeholders such as board of directors, managers, employees and shareholders to coordinate with each other to investigate the feasibility of reorganization, conduct the due diligence research, deliberate the takeover strategy, negotiate the restructuring procedure, and reach the final agreement (Vieira, 2019). Especially, transnational mergers and acquisitions need more public relations support, including cross culture communication, bilateral negotiation, professional consultation and shareholder meeting arrangement, etc. They require both acquirer and acquiree, offeror and offeree to carefully study each other’s corporate culture and value, analyze each other’s equity structure as well as assets and liabilities, draft unanimous restructuring proposal to achieve their common interest.

Nevertheless, public relations could also bring about adverse effects on corporate governance (Edwards, Scott & Raju, 2003). In some merger and acquisition cases, the managements of acquiring company and target company collude through their designed and planned public relations to embezzle corporate assets and equities, which badly damage shareholders’, particularly minority shareholders’ interests (Scott & Carrington, 2014). What is more, some controlling shareholders of listed companies prefer to extract personal connections from public relations to seek their personal gains, which could result in insider trading without piercing corporate veil or disclosing sufficient corporate information. Some staff may lose their jobs due to employment contract discontinuation or termination by company (Useem, 1984). Thus, public relations need to be monitored and managed, sometimes even prohibited at the certain stage of corporate mergers and acquisitions.

This research is carried out across the cultural context of Asian-Pacific Region. It adopts qualitative and empirical methodologies on the base of multiple case studies to investigate the functional impact of public relations on corporate management, and scrutinize the pros and cons of public relations in corporate mergers and acquisitions. Analytical and comparable methodologies will be also adopted in this research to clarify the relationships among individuals, companies and government agencies, pinpoint the rights, obligations and responsibilities of stakeholders, and find out the applicable boundary of public relations in corporate reorganization. It is recommended that laws should be reviewed and applied for public relations speculation. Related rules and regulations should be introduced to restrict stakeholders from abusing their power over public relations for their individual benefits (Bowman, 2018). Corporate executives and decision-makers should maintain good moral standard and professional integrity throughout internal and external communications (Aluchna & Idowu, 2017). Whistleblowing system should be established to supervise their public relations for corporate mergers and acquisitions. In doing so, company could balance its profitability and sociality to keep a healthy and sustainable development in serving the community.