The association between busy directors and acquisition performance

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dc.contributor.author Sim, L
dc.contributor.author Wells, PA
dc.contributor.author Wyatt, A
dc.contributor.editor Faff, R
dc.date.accessioned 2011-02-07T06:29:01Z
dc.date.issued 2009-01
dc.identifier.citation 2009 AFAANZ Conference, 2009, pp. 1 - 47
dc.identifier.other E1UNSUBMIT en_US
dc.identifier.uri http://hdl.handle.net/10453/14173
dc.description.abstract This paper addresses the question of whether independent directors of the bidding firm are effective monitors during acquisitions and whether this effectiveness is impaired when the independent directors serve on multiple boards. The choice of the acquisition setting, where the board of directors is known to be engaged in active decision-making, facilitates a direct test of the role of independent directors as effective, external monitors of the boards activities. We employ three indicators of the bidding boards performance in making optimal acquisition decisions: the acquisition premium (benchmarked against subsequent performance), a new indicator comprising the conflicts of interest associated with the acquisitions (conflicted acquisitions), and the post-acquisition stock performance. The results suggest that more independent boards and busy independent directors on the bidding firms board are associated with more effective acquisition decisions by the board. However, busy independent directors are associated with less effective acquisition decisions when the bidding firm has higher free cash flows consistent with Jensen (1986). We also find that busy executive directors on the bidding firms board have no implications for the effectiveness of acquisition decisions unless the director is a busy chairperson or busy CEO both of whom are associated with less effective acquisition decisions. This paper contributes direct evidence on the effectiveness of bidding firm independent directors in their role as monitors and decision-makers.
dc.publisher AFAANZ
dc.title The association between busy directors and acquisition performance
dc.type Conference Proceeding
dc.parent 2009 AFAANZ Conference
dc.journal.number en_US
dc.publocation Australia en_US
dc.identifier.startpage 1 en_US
dc.identifier.endpage 47 en_US
dc.cauo.name BUS.School of Accounting en_US
dc.conference Verified OK en_US
dc.conference Accounting and Finance Association of Australia and New Zealand Conference
dc.for 150303 Corporate Governance and Stakeholder Engagement
dc.personcode 920016
dc.personcode 100288
dc.personcode 104348
dc.percentage 100 en_US
dc.classification.name Corporate Governance and Stakeholder Engagement en_US
dc.classification.type FOR-08 en_US
dc.edition en_US
dc.custom Accounting and Finance Association of Australia and New Zealand Conference en_US
dc.date.activity 20090705 en_US
dc.date.activity 2009-07-05
dc.location.activity Adelaide, Australia en_US
dc.description.keywords board composition; busy directors; acquisitions performance. en_US
dc.description.keywords board composition
dc.description.keywords busy directors
dc.description.keywords acquisitions performance.
pubs.embargo.period Not known
pubs.organisational-group /University of Technology Sydney
pubs.organisational-group /University of Technology Sydney/Faculty of Business
pubs.organisational-group /University of Technology Sydney/Faculty of Business/School of Accounting
pubs.organisational-group /University of Technology Sydney/Strength - Corporate Governance
utslib.copyright.status Open Access
utslib.copyright.date 2015-04-15 12:23:47.074767+10
utslib.collection.history General (ID: 2)


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