The Market for Non-Executive Directors: Does Acquisition Performance Influence Future Board Seats?

46 Pages Posted: 2 Feb 2018

See all articles by Marc Goergen

Marc Goergen

IE Business School, IE University; European Corporate Governance Institute (ECGI)

Svetlana Mira

Cardiff University

Noel O'Sullivan

Loughborough University - School of Business and Economics

Date Written: January 2018

Abstract

This paper investigates whether non-executive directors associated with good (bad) board decisions are subsequently rewarded (penalized) in the market for directors. This question is addressed by assessing whether the post-acquisition performance of acquiring companies influences the number of non-executive directorships that non-executives involved in these acquisitions hold subsequent to the acquisition. We find that non-executives on the boards of acquirers that increase (omit or cut) their dividend subsequently hold more (fewer) non-executive directorships in listed companies. Our findings suggest that the non-executive labor market is efficient and rewards (penalizes) non-executives for good (bad) acquisitions.

Keywords: Non-executive directors, market for directors, corporate governance, mergers and acquisitions, dividends

JEL Classification: G34, G35

Suggested Citation

Goergen, Marc and Mira, Svetlana and O'Sullivan, Noel, The Market for Non-Executive Directors: Does Acquisition Performance Influence Future Board Seats? (January 2018). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 551/2018. Available at SSRN: https://ssrn.com/abstract=3111873 or http://dx.doi.org/10.2139/ssrn.3111873

Marc Goergen

IE Business School, IE University ( email )

Finance Department
Maria de Molina, 12
Madrid, 28006
Spain

HOME PAGE: http://www.ie.edu/business-school/faculty-and-research/faculty/marc-goergen/

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Svetlana Mira (Contact Author)

Cardiff University ( email )

Aberconway Building
Colum Drive
Cardiff, Wales CF10 3EU
United Kingdom

Noel O'Sullivan

Loughborough University - School of Business and Economics ( email )

Ashby Road
Loughborough
Leicestershire LE11, LE11 3TU
Great Britain
44 1509 223114 (Phone)

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