EconPapers    
Economics at your fingertips  
 

Board involvement in the M&A negotiation process

Gül Demirtaş

International Review of Financial Analysis, 2017, vol. 50, issue C, 27-43

Abstract: This paper examines whether the active engagement of target firm directors in the sale process affects merger outcomes. Using data manually extracted from merger-related SEC filings, I create two measures of target board involvement in merger negotiations: the number of days it takes for the board to meet after the beginning of the sale process and the number of board meetings held throughout the entire process. I find that early board involvement in merger talks increases target shareholder returns and premiums, especially when shareholders have weak control over their firms and are thus in greater need of board protection. Although the two measures of target board activity do not affect acquirer cumulative abnormal returns or the likelihood of competition, such activity does reduce the likelihood of an excessive target termination fee. Robustness analyses dismiss an alternative explanation whereby attractive initial bids lead to both early board involvement and attractive final bids.

Keywords: Mergers and acquisitions; Corporate governance; Board meetings (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521917300054
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:50:y:2017:i:c:p:27-43

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Series data maintained by Dana Niculescu ().

 
Page updated 2017-11-11
Handle: RePEc:eee:finana:v:50:y:2017:i:c:p:27-43