Governance mandates, outside directors, and acquirer performance

Dahya, Jay; Golubov, Andrey; Petmezas, Dimitris; Travlos, Nickolaos G.

Abstract

We use hand-collected board data around the issuance of two distinct government-led board structure mandates in the U.K. to establish the effect of outside directors on acquirer performance. Increases in outside director representation are associated with better acquirer returns in deals involving listed targets, but not when the target is private. These results are consistent with greater outside director reputational exposure when publicity is high. While we do not advocate mandated board structures, our evidence suggests that the particular diktats we examine were associated with improved acquirer performance in public firm takeovers. We present corroborating evidence from the U.S. around a similar reform period.

Citation

Dahya, J., Golubov, A., Petmezas, D., & Travlos, N. G. (2019). Governance mandates, outside directors, and acquirer performance. Journal of Corporate Finance, 59, 218-238. https://doi.org/10.1016/j.jcorpfin.2016.11.005

• Journal Article Type: Article
• Acceptance Date: Nov 7, 2016
• Online Publication Date: Nov 18, 2016
• Publication Date: 2019-12
• Deposit Date: Jul 29, 2020
• Publicly Available Date: Jul 29, 2020
• Journal: Journal of Corporate Finance
• Print ISSN: 0929-1199
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 59
• Pages: 218-238
• DOI: https://doi.org/10.1016/j.jcorpfin.2016.11.005
• Public URL: https://durham-repository.worktribe.com/output/1264983
• Related Public URLs: https://epubs.surrey.ac.uk/820955/