Document Type
Article
Publication Date
2-2012
Publisher
Elsevier B.V.
Abstract
We examine M&A transactions between firms with current board connections and find that acquirers obtain higher announcement returns in transactions with a first-degree connection where the acquirer and the target share a common director. Acquirer returns are also higher in transactions with a second-degree connection where one acquirer director and one target director serve on the same third board. Our results suggest that first-degree connections benefit acquirers with lower takeover premiums while second-degree connections benefit acquirers with greater value creation. Overall, we provide new evidence that board connectedness plays important roles in corporate investments and leads to greater value creation.
Recommended Citation
Cai, Ye, and Merih Sevilir. "Board Connections and M&A Transactions." Journal of Financial Economics 103.2 (2012): 327-49
Comments
NOTICE: this is the author's version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Economics, vol. 103, no.2, (2012)]
doi:10.1016/j.jfineco.2011.05.017.