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Does CFO Board Membership Benefit Shareholders? The Case of Corporate Acquisitions

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  • Chen, Zhong
  • Lei, Zicheng
  • Xia, Chunling

Abstract

We investigate whether chief financial officers (CFOs) serving on U.S. corporate boards benefit shareholders in M&A transactions. We find that acquisitions made by firms with CFOs on boards have significantly better acquirer announcement returns. This is due to the CFO director’s ability to select targets with better strategic and financial fit. CFO board membership can create shareholder value if there are effective governance regimes restraining managerial entrenchment and CFOs’ interests are closely aligned with those of shareholders through equity ownership. Furthermore, sitting on boards enables CFOs to secure more and cheaper financing for their acquisitions.

Suggested Citation

  • Chen, Zhong & Lei, Zicheng & Xia, Chunling, 2025. "Does CFO Board Membership Benefit Shareholders? The Case of Corporate Acquisitions," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 60(3), pages 1558-1585, May.
    • Handle: RePEc:cup:jfinqa:v:60:y:2025:i:3:p:1558-1585_15
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