Exit, Voice, and the Role of Corporate Directors: Evidence from Acquisition Performance

43 Pages Posted: 25 Aug 1999

See all articles by William O. Brown

William O. Brown

University of North Carolina (UNC) at Greensboro

Michael T. Maloney

Clemson University - John E. Walker Department of Economics

Abstract

This study examines the characteristics of corporate boards for 82 companies that attempted 106 acquisitions during the 1980s. We find that poor performance is more likely to occur in firms that have recently experienced higher turnover of outside and lower turnover of inside directors. Companies with smaller boards, more reputable members, and larger equity holdings also outperform their counterparts. Our results suggest that outside directors resign from the board instead of challenging managerial shirking. We conclude that choosing directors for whom board exit is costly will better reduce agency costs.

JEL Classification: G34

Suggested Citation

Brown, William O. and Maloney, Michael T., Exit, Voice, and the Role of Corporate Directors: Evidence from Acquisition Performance. Available at SSRN: https://ssrn.com/abstract=160308 or http://dx.doi.org/10.2139/ssrn.160308

William O. Brown (Contact Author)

University of North Carolina (UNC) at Greensboro ( email )

Bryan School of Business
PO Box 26165
Greensboro, NC 274026165
United States
336-256-0110 (Phone)

Michael T. Maloney

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States
864-656-3430 (Phone)
864-656-4192 (Fax)

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