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Director gender and mergers and acquisitions

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  • Levi, Maurice
  • Li, Kai
  • Zhang, Feng

Abstract

Does director gender influence CEO empire building? Does it affect the bid premium paid for target firms? Less overconfident female directors less overestimate merger gains. As a result, firms with female directors are less likely to make acquisitions and if they do, pay lower bid premia. Using acquisition bids by S&P 1500 companies during 1997–2009 we find that each additional female director is associated with 7.6% fewer bids, and each additional female director on a bidder board reduces the bid premium paid by 15.4%. Our findings support the notion that female directors help create shareholder value through their influence on acquisition decisions. We also discuss other possible interpretations of our findings.

Suggested Citation

  • Levi, Maurice & Li, Kai & Zhang, Feng, 2014. "Director gender and mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 185-200.
    • Handle: RePEc:eee:corfin:v:28:y:2014:i:c:p:185-200
    DOI: 10.1016/j.jcorpfin.2013.11.005
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    More about this item

    Keywords

    Director gender; Bid initiation; Bid premium; Mergers and acquisitions; Overconfidence; Risk aversion;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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