Director Histories and the Pattern of Acquisitions

Peter Rousseau and Caleb Stroup

Journal of Financial and Quantitative Analysis, 2015, vol. 50, issue 4, 671-698

Abstract: We trace directors through time and across firms to study whether acquirers’ access to nonpublic 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 interfirm interlocks.

Date: 2015
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Working Paper: Director Histories and the Pattern of Acquisitions (2013)
Working Paper: Director Histories and the Pattern of Acquisitions (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jfinqa:v:50:y:2015:i:04:p:671-698_00

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