Board Changes and the Director Labor Market: The Case of Mergers
63 Pages Posted: 3 Jul 2015 Last revised: 15 Aug 2018
Date Written: August 1, 2018
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: Suggested Citation