Busy directors and firm performance: Evidence from Australian mergers

Sorin Ovidiu Daniliuc, Lingwei Li and Marvin Wee

Pacific-Basin Finance Journal, 2020, vol. 64, issue C

Abstract: We examine the impact of busy directors on firm performance in Australia. We do so by exploiting the exogenous reduction in board appointments generated by mergers that terminate target boards, replicating Hauser (2018)’s U.S. study. When using the entire sample of Australian publicly listed firms, we do not find significant changes in firm performance for firms that experience a reduction in board appointments. However, when partitioning the sample by firm size, we find increases in return on assets and Tobin's q for large Australian firms where their directors lose seats on acquired boards. The results show director appointments influence the performance of large Australian firms via a workload channel, in a similar way to S&P1500 U.S. firms. However, there is a need to consider the negative effects of board connections lost for the smaller Australian listed firms.

Keywords: Busy directors; Workload reduction; Board connections; Firm performance; Mergers and acquisitions; Replication (search for similar items in EconPapers)
JEL-codes: G34 J22 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:64:y:2020:i:c:s0927538x2030384x

DOI: 10.1016/j.pacfin.2020.101434

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