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

Nikos Bozionelos () and Marianne Affanassieva
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Nikos Bozionelos: Audencia Recherche - Audencia Business School
Marianne Affanassieva: HUBS - Hull University Business School - University of Hull [United Kingdom]

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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.

Keywords: Women Directors; Prudency; Firm Acquisition; Board Composition; Overconfidence; Bidding; Gender Composition (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ger
Note: View the original document on HAL open archive server: https://audencia.hal.science/hal-01145846
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Published in Academy of Management Perspectives, 2015, 29 (1), ⟨10.5465/amp.2015.0038⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01145846

DOI: 10.5465/amp.2015.0038

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