Do acquirer boards influence M&A value creation? Evidence from European takeovers
Defrancq, Corneel Huyghebaert, Nancy Luypaert, Mathieu
Defrancq, Corneel
Huyghebaert, Nancy
Luypaert, Mathieu
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2017
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Abstract
We examine how the size and composition of acquirer boards relate to shareholder announcement returns for a sample of 3,289 M&As initiated by European listed firms. We find that board size has an U-shaped relation with M&A announcement returns in Continental Europe. Also, acquirer shareholders in Continental Europe realize significantly larger abnormal returns if boards have a larger fraction of independent and busy directors. Next, our findings question the recent call for more diversity in board composition by the public and by regulation-shaping bodies, at least in the context of M&As. While gender and age diversity prove irrelevant, we show that the proportion of foreign directors is significantly negatively associated with value creation in domestic takeovers. In the case of cross-border M&As, we find no positive effect either. Finally, and contrary to expectations, we detect a significant negative impact of director expertise in the target industry on acquirer shareholder value in industry-diversifying takeovers outside Continental Europe.
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M&A, European Takeovers