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Director Histories and the Pattern of Acquisitions

Author

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  • Caleb Stroup

    (Department of Economics, Davidson College)

  • Peter L. Rousseau

    (Department of Economics, Vanderbilt University)

Abstract

We trace directors through time and across firms to study whether acquirers' access to non-public information about potential targets via their directors' past board service histories affects the market for corporate control. In a sample of publicly-traded U.S. firms, we find acquirers about 4.5 times more likely to buy firms where their directors once served. Effects are stronger when the acquirer has better corporate governance, the interlocked director has a larger ownership stake at the acquirer, or the director played an important role during past service. The findings are robust to endogeneity of board composition and controls for contemporaneous inter-firm interlocks. Publication Status: Published in Journal of Financial and Quantitative Analysis, 2015, 50(4):671-698.

Suggested Citation

  • Caleb Stroup & Peter L. Rousseau, 2013. "Director Histories and the Pattern of Acquisitions," Working Papers 13-03, Davidson College, Department of Economics.
  • Handle: RePEc:dav:wpaper:13-03
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    Cited by:

    1. Gentry, Matthew & Stroup, Caleb, 2019. "Entry and competition in takeover auctions," Journal of Financial Economics, Elsevier, vol. 132(2), pages 298-324.
    2. Renneboog, Luc & Vansteenkiste, Cara, 2019. "Failure and success in mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 650-699.
    3. Caleb Stroup, 2017. "International Deal Experience And Cross-Border Acquisitions," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 73-97, January.
    4. Fuchs, Florian & Füss, Roland & Jenkinson, Tim & Morkoetter, Stefan, 2021. "Winning a deal in private equity: Do educational ties matter?," Journal of Corporate Finance, Elsevier, vol. 66(C).
    5. Fuchs, Florian & Fuess, Roland & Jenkinson, Tim & Morkoetter, Stefan, 2017. "Winning a Deal in Private Equity: Do Educational Networks Matter?," Working Papers on Finance 17155, University of St. Gallen, School of Finance.
    6. Kun Li & Chaohua He & Wassim Dbouk & Ke Zhao, 2021. "The Value of CSR in Acquisitions: Evidence from China," Sustainability, MDPI, Open Access Journal, vol. 13(7), pages 1-21, March.
    7. Feng, Yi & Song, Keke & Tian, Yisong S., 2019. "Director networks and initial public offerings," Journal of Banking & Finance, Elsevier, vol. 106(C), pages 246-264.

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    More about this item

    Keywords

    interlocking directorates; board networks; social networks; corporate governance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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