Multiple directorships and acquirer returns |
| |
Authors: | Seoungpil Ahn Pornsit Jiraporn Young Sang Kim |
| |
Affiliation: | 1. Sogang Business School, Sogang University, Republic of Korea;2. Great Valley School of Graduate Professional Studies, Pennsylvania State University, USA;3. Thammasat Business School, Thammasat University, Thailand;4. Haile/US Bank College of Business, Northern Kentucky University, USA |
| |
Abstract: | This paper examines the impact of multiple directorships on stockholder wealth around the announcements of mergers and acquisitions. Grounded in agency theory, we argue that multiple directorships affect the quality of managerial oversight and thus influence agency conflicts in acquisition decisions. We show that acquiring firms where directors hold more outside board seats experience more negative abnormal returns. This adverse effect, nonetheless, does not extend across the entire range of multiple directorships. Rather, the detrimental impact is significant only when the number of outside board seats surpasses a certain threshold. We interpret this result as suggesting that directors serving on multiple boards allow value-destroying acquisitions when they become too busy beyond a certain point, and the effect of directors’ busyness on acquisition performance appears to be nonlinear. We employ several alternative definitions of directors’ busyness and obtain consistent results. |
| |
Keywords: | G32 G34 |
本文献已被 ScienceDirect 等数据库收录! |
|