The Effect of Director Experience on Acquisition Performance

54 Pages Posted: 16 Sep 2012 Last revised: 29 Oct 2016

See all articles by Laura Casares Field

Laura Casares Field

University of Delaware - Alfred Lerner College of Business and Economics

Anahit Mkrtchyan

Northeastern University - D’Amore-McKim School of Business

Date Written: April 12, 2016

Abstract

Prior research finds that firms hire directors for their acquisition experience, regardless of acquisition quality (whether their prior acquisitions earned positive or negative announcement returns). Using several short- and long-run measures, we examine the effects of directors’ acquisition experience on the acquisition performance of firms hiring them. We find that board acquisition experience is positively related to subsequent acquisition performance, demonstrating that firms appropriately value experience. Beyond experience itself, however, the quality of directors’ prior acquisitions is also important. Our results suggest that firms may be better served to select directors based upon both past acquisition experience and acquisition performance.

Keywords: corporate governance, board of directors, mergers and acquisitions

JEL Classification: G30, G34, J24

Suggested Citation

Field, Laura Casares and Mkrtchyan, Anahit, The Effect of Director Experience on Acquisition Performance (April 12, 2016). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2147169 or http://dx.doi.org/10.2139/ssrn.2147169

Laura Casares Field (Contact Author)

University of Delaware - Alfred Lerner College of Business and Economics ( email )

419 Purnell Hall
Newark, DE 19716
United States
302-831-3810 (Phone)

Anahit Mkrtchyan

Northeastern University - D’Amore-McKim School of Business ( email )

360 Huntington Ave.
Boston, MA 02115
United States

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