The influence of powerful non-executive Chairs in Mergers and acquisitions

Publication Type:
Journal Article
Journal of Contemporary Accounting and Economics, 2019, 15 (1), pp. 87 - 104
Issue Date:
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© 2018 Elsevier Ltd This paper examines the influence of the non-executive Chair of bidding firms on various takeover outcomes. We study this in the Australian context due to its unique institutional setting where only 5% of Chair and CEO roles are combined, compared to 60% in the U.S. Based on a sample of 316 acquisitions by ASX listed firms between 2004 and 2014, we find that firms with a powerful Chair pay lower bid premiums and are also less likely to revise the initial offer price. Furthermore, Chair power is found to have a positive association with the bidding firm's market reaction to the takeover announcement. Our evidence is robust with respect to alternative tests and variable specifications.
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