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Director Histories and the Pattern of Acquisitions

Author

Listed:
  • 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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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jingbo Luo & Weimin Wang, 2023. "Do managers' professional connections benefit their firms in mergers and acquisitions: Chinese evidence," Review of Quantitative Finance and Accounting, Springer, vol. 60(2), pages 679-713, February.
    2. Gentry, Matthew & Stroup, Caleb, 2019. "Entry and competition in takeover auctions," Journal of Financial Economics, Elsevier, vol. 132(2), pages 298-324.
    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 & 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.
    5. Guoli Chen & Jiyang Dong & Jinshuai Hu & Feida Zhang, 2024. "Regulatory institutional misalignment and cross-border acquisitions: evidence from an emerging-market country," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(2), pages 172-193, March.
    6. Li, Chang & Wang, Chu & Yang, Lianxing & Chu, Baoju, 2023. "Impact of cultural trade on foreign direct investment: Evidence from China," Emerging Markets Review, Elsevier, vol. 55(C).
    7. Renneboog, Luc & Zhao, Yang, 2014. "Director networks and takeovers," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 218-234.
    8. 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).
    9. Renneboog, Luc & Vansteenkiste, Cara, 2019. "Failure and success in mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 650-699.
    10. 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.
    11. Ding, Haoyuan & Hu, Yichuan & Li, Chang & Lin, Shu, 2021. "CEO country-specific experience and cross-border mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 69(C).
    12. Li, Panni & Lin, Zhongguo & Peng, Binbin & Du, Huibin, 2023. "Do CEOs’ social networks affect carbon emissions in China? The moderating role of CEO reputation," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 1122-1137.
    13. Kun Li & Chaohua He & Wassim Dbouk & Ke Zhao, 2021. "The Value of CSR in Acquisitions: Evidence from China," Sustainability, MDPI, vol. 13(7), pages 1-21, March.
    14. Ladley, Daniel & Rousseau, Peter L., 2023. "Panic and propagation in 1873: A network analytic approach," Journal of Banking & Finance, Elsevier, vol. 151(C).

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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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