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Does Having More Women on the Board Impact Firms’ Acquisition Behavior?

Author

Listed:
  • Nikos Bozionelos

    (Audencia Recherche - Audencia Business School)

  • Marianne Affanassieva

    (HUBS - Hull University Business School - University of Hull [United Kingdom])

Abstract

The article focuses on whether the gender composition of the board of directors influences the decisions made by the board when they acquire firms. Acquisition decisions have long-term consequences and provide therefore a very good frame to investigate decision behavior of the board of directors. The idea is that the greater the proportion of women in a board the less likely will be for the board to bid to acquire other firms, and the less the premium (amount of money) it would offer to pay for acquiring other firms. The reason behind such behavior is the lower overconfidence of women in comparison to men. Overconfident individuals believe that they hold accurate views about the future and that the future will be favorable to them. Women are less overconfident than men. Data from all 1500 firms included in the Standard&Poors index over a 12-year period confirmed the idea. In essence this means that boards of directors with more women in them are wiser. They are less likely to bid for other firms and when then acquire such firms they are more likely to pay a realistic price (and not overpay). The study, therefore, provides a strong argument for increasing gender diversity in boards of directors.

Suggested Citation

  • Nikos Bozionelos & Marianne Affanassieva, 2015. "Does Having More Women on the Board Impact Firms’ Acquisition Behavior?," Post-Print hal-01145846, HAL.
    • Handle: RePEc:hal:journl:hal-01145846
    DOI: 10.5465/amp.2015.0038
    Note: View the original document on HAL open archive server: https://audencia.hal.science/hal-01145846
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    References listed on IDEAS

    as
    1. Malmendier, Ulrike & Tate, Geoffrey, 2008. "Who makes acquisitions? CEO overconfidence and the market's reaction," Journal of Financial Economics, Elsevier, vol. 89(1), pages 20-43, July.
    2. Huang, Jiekun & Kisgen, Darren J., 2013. "Gender and corporate finance: Are male executives overconfident relative to female executives?," Journal of Financial Economics, Elsevier, vol. 108(3), pages 822-839.
    3. Levi, Maurice & Li, Kai & Zhang, Feng, 2014. "Director gender and mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 185-200.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Women Directors; Prudency; Firm Acquisition; Board Composition; Overconfidence; Bidding; Gender Composition;
    All these keywords.

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