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The role of investment banker directors in M&A

Author

Listed:
  • Huang, Qianqian
  • Jiang, Feng
  • Lie, Erik
  • Yang, Ke

Abstract

We examine how directors with investment banking experience affect firms׳ acquisition behavior. We find that firms with investment bankers on the board have a higher probability of making acquisitions. Furthermore, acquirers with investment banker directors experience higher announcement returns, pay lower takeover premiums and advisory fees, and exhibit superior long-run performance. Overall, our results suggest that directors with investment banking experience help firms make better acquisitions, both by identifying suitable targets and by reducing the cost of the deals.

Suggested Citation

  • Huang, Qianqian & Jiang, Feng & Lie, Erik & Yang, Ke, 2014. "The role of investment banker directors in M&A," Journal of Financial Economics, Elsevier, vol. 112(2), pages 269-286.
    • Handle: RePEc:eee:jfinec:v:112:y:2014:i:2:p:269-286
    DOI: 10.1016/j.jfineco.2014.02.003
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    More about this item

    Keywords

    Mergers and acquisitions; Board of directors; Investment banking experience;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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