Director gender and mergers and acquisitions |
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Institution: | 1. Sauder School of Business, University of British Columbia, 2053 Main Mall, Vancouver BC V6T 1Z2, Canada;2. David Eccles School of Business, University of Utah, 1655 E. Campus Center Dr., Salt Lake City, UT 84112, United States;1. La Trobe University, Bundoora, Vic 3086, Australia;2. Hanoi University, Km 9 Nguyen Trai Road, Thanh Xuan District, Hanoi, Viet Nam;3. Khalifa University, Abu Dhabi, United Arab Emirates |
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Abstract: | Does director gender influence CEO empire building? Does it affect the bid premium paid for target firms? Less overconfident female directors less overestimate merger gains. As a result, firms with female directors are less likely to make acquisitions and if they do, pay lower bid premia. Using acquisition bids by S&P 1500 companies during 1997–2009 we find that each additional female director is associated with 7.6% fewer bids, and each additional female director on a bidder board reduces the bid premium paid by 15.4%. Our findings support the notion that female directors help create shareholder value through their influence on acquisition decisions. We also discuss other possible interpretations of our findings. |
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