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Board attributes and shareholder wealth in mergers and acquisitions: a survey of the literature

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Abstract

The question of whether a “good” corporate board structure can optimize performance and minimize conflicts between managers and shareholders has been widely debated. Because mergers and acquisitions represent major managerial investment decisions that are subject to board scrutiny, the effectiveness of a board’s structure is especially visible in the context of corporate acquisitions. With that in mind, in this paper, we examine the abundant literature in the fields of strategic management, economics, and finance in order to identify which board attributes contribute to the ability of corporate boards to create value through mergers and acquisitions. In particular, we discuss the impact of four board attributes: (1) board independence, (2) board size and director-specific attributes, (3) board ownership and compensation, (4) multiple directorships. As a result of our analysis, we conclude that the impact of board attributes on shareholder wealth in mergers and acquisitions is specific to each firm. Therefore, board regulations that do not reflect a firm’s specific needs may in fact hinder the creation of a board that is capable of responding effectively to the firm’s unique needs and circumstances.

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Notes

  1. We use the following key words for the research: board/board composition/director/governance + acquisition performance/acquisition/takeover/acquisition activity/target/bidder/premium.

  2. The board attribute that has received the most attention from researchers is certainly that of board composition. Board composition normally concerns issues related to board independence, board size and board diversity.

  3. In this article, we do not review the articles dealing with the impact of managerial ownership on acquisition performance, since our focus is on the impact of board characteristics on acquisition performance.

  4. I would like to thank the anonymous referee for this helpful comment.

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  1. Audencia Nantes, School of Management, 8 route de la Jonelière, 44312, Nantes Cedex 3, France

    Etienne Redor

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Redor, E. Board attributes and shareholder wealth in mergers and acquisitions: a survey of the literature. J Manag Gov 20, 789–821 (2016). https://doi.org/10.1007/s10997-015-9328-y

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