Director Gender and Mergers and Acquisitions
Maurice D. Levi
University of British Columbia (UBC) - Sauder School of Business
University of British Columbia (UBC) - Sauder School of Business; China Academy of Financial Research (CAFR)
University of Utah - Department of Finance
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 percent fewer bids, and each additional female director on a bidder board reduces the bid premium paid by 15.4 percent. 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.
Number of Pages in PDF File: 44
Keywords: director gender, bid initiation, bid premium, mergers and acquisitions, overconfidence, risk aversion
JEL Classification: G34, G38
Date posted: May 9, 2012 ; Last revised: November 8, 2013
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