When Do Boards of Directors Contribute to Shareholder Value in Firms Targeted for Acquisition? A Group Information-Processing Perspective

Stevo Pavićević (), Jerayr (John) Haleblian () and Thomas Keil ()
Additional contact information
Stevo Pavićević: Management Department, Frankfurt School of Finance and Management, 60322 Frankfurt, Germany
Jerayr (John) Haleblian: School of Business, University of California, Riverside, Riverside, California 92521
Thomas Keil: Department of Business Administration, University of Zurich, CH-8032 Zurich, Switzerland

Organization Science, 2023, vol. 34, issue 5, 1759-1776

Abstract: We draw on group information-processing theory to investigate how target boards of directors may contribute to target value capture during the private negotiations phase in acquisitions. We view target boards as information-processing groups and private negotiations as information-processing tasks. We argue that target board meeting frequency is associated with increased processing—gathering, sharing, and analyzing—of acquisition-related information, which improves target bargaining and, ultimately, target value capture. We further posit that this value-enhancing effect of target board meeting frequency is more pronounced when target board composition improves the ability of target boards to process acquisition-related information. Finally, we expect that meeting frequency is more consequential for target bargaining and value capture when acquisition complexity imposes high information-processing demands on the target boards during private negotiations. Empirical evidence from a sample of acquisitions of publicly listed firms in the United States offers support for our group information-processing perspective on board contribution to shareholder value in firms targeted for acquisition.

Keywords: acquisitions; board of directors; board meetings; group information processing; negotiations; complexity (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/orsc.2022.1643 (application/pdf)

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:inm:ororsc:v:34:y:2023:i:5:p:1759-1776

Access Statistics for this article

More articles in Organization Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().