Board Changes and the Director Labor Market: The Case of Mergers

63 Pages Posted: 3 Jul 2015 Last revised: 15 Aug 2018

See all articles by David A. Becher

David A. Becher

Drexel University

Ralph A. Walkling

Drexel University - Lebow College of Business

Jared I. Wilson

Indiana University - Kelley School of Business

Date Written: August 1, 2018

Abstract

Mergers offer an ideal setting to examine motives for director selection by providing a welldefined pool of possible candidates for the post-merger board. We find that changes to boards around mergers are significant and reflect firms’ increased complexity. Post-merger boards experience an increase in director expertise tied to managing and monitoring more complex firms. Directors selected have more of these characteristics than those considered but not selected. These effects increase with deal complexity in ways consistent with firm-need, even after controlling for other motivations. Our evidence demonstrates the importance of changing monitoring and advising needs in the demand for directors.

Keywords: Mergers and acquisitions; Boards of directors; Director labor market

JEL Classification: G34

Suggested Citation

Becher, David A. and Walkling, Ralph August and Wilson, Jared I., Board Changes and the Director Labor Market: The Case of Mergers (August 1, 2018). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 498/2017. Available at SSRN: https://ssrn.com/abstract=2625798 or http://dx.doi.org/10.2139/ssrn.2625798

David A. Becher (Contact Author)

Drexel University ( email )

3220 Market Street
1127 Gerri C LeBow Hall
Philadelphia, PA 19104
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215-895-2274 (Phone)
215-895-2295 (Fax)

Ralph August Walkling

Drexel University - Lebow College of Business ( email )

LeBow College of Business
Philadelphia, PA 19104
United States
(215) 895-4920 (Phone)
(215) 895-6119 (Fax)

Jared I. Wilson

Indiana University - Kelley School of Business ( email )

Kelley School of Business
801 W. Michigan Street
Indianapolis, IN 46202
United States
317-278-4715 (Phone)

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