Corporate entrepreneurship and governance: Mergers and acquisitions in Europe

C. José García and Begoña Herrero

Technological Forecasting and Social Change, 2022, vol. 182, issue C

Abstract: Mergers and acquisitions (M&A) are a form of corporate entrepreneurship involving strategic decisions that require discussion and approval by the board of directors of the acquiring firm. We focus on board attributes to analyze the entrepreneurial function of the board of directors and its involvement in corporate entrepreneurship. Building on different theories (agency theory, resource dependence theory, stewardship theory, and stakeholder theory), we examine whether board composition affects the number of acquisitions, the risk involved in bids, and the creation of value for the acquirer's shareholders. For a sample of European firms over the period 2002 to 2020, we find that board size and the percentage of external directors are related to the number of acquisitions. However, neither the percentage of women on the board nor CEO duality affects the number of acquisitions by a given firm. We also show that more risky acquisitions are associated with larger firms with a lower proportion of women directors, whereas less risky transactions are related to smaller firms where the CEO is also the chair of the board. Finally, our results indicate that firm acquisitions create value for the acquiring firm and that the market reaction is positively related to board size and CEO duality.

Keywords: Mergers and acquisitions; Corporate board; Board of directors; Abnormal return; M&A performance (search for similar items in EconPapers)
JEL-codes: G14 G30 G34 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:182:y:2022:i:c:s0040162522003699

DOI: 10.1016/j.techfore.2022.121845

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