Abstract

http://ssrn.com/abstract=1322223
 
 

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Board Networks and Merger Performance


Param Vir Singh


Carnegie Mellon University - David A. Tepper School of Business

Robert J. Schonlau


Brigham Young University - Department of Finance

September 8, 2009


Abstract:     
We compare the post-merger financial performance of acquiring firms that have well-connected (central) boards with the performance of less-connected (non-central) boards and find that central boards are associated with better performing acquisitions as evidenced by larger post-merger buy-and-hold abnormal returns, stronger improvements in the ROA, and a 7-12% annual abnormal return based on calendar time portfolios. Central firms are more likely to use cash, to make an acquisition, and to be acquired. Our results suggest that board networks affect the decision to acquire, the choice of target, the method of payment, and ultimately the financial performance of the firm around the merger.

Number of Pages in PDF File: 63

Keywords: Mergers, Directors, Networks, Acquisitions, Interlocks, Boards

JEL Classification: G34, G30, G39

working papers series


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Date posted: January 1, 2009 ; Last revised: September 10, 2009

Suggested Citation

Singh, Param Vir and Schonlau, Robert J., Board Networks and Merger Performance (September 8, 2009). Available at SSRN: http://ssrn.com/abstract=1322223 or http://dx.doi.org/10.2139/ssrn.1322223

Contact Information

Param Vir Singh
Carnegie Mellon University - David A. Tepper School of Business ( email )
5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-3585 (Phone)
Robert J. Schonlau (Contact Author)
Brigham Young University - Department of Finance ( email )
Marriott School of Management
682 TNRB
Provo, UT 84602
United States
801-422-5879 (Phone)
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