Publication Type
Conference Paper
Version
submittedVersion
Publication Date
10-2012
Abstract
This paper investigates the impact of social ties between the Chief Executive Officer (CEO) andboard members on corporate risk-taking in mergers and acquisitions (M&As) and on shareholdervalue. Using a measure of CEO-director connections in a large sample of U.S. firms from 2000 to2010, we document that boardroom connections lower firm acquisitiveness. If connected CEOsundertake M&As, they are less likely to choose focus acquisitions, and more likely to pay in stock.CEO-board connections do not enhance firm value in M&As. Higher levels of boardroomconnection are associated with lower announcement returns and lower subsequent return on assets.Our results are robust to alternative explanations and various robustness checks.
Keywords
Social networks, mergers and acquisitions, corporate risk-taking, CEO, board of directors
Discipline
Corporate Finance | Strategic Management Policy
Research Areas
Finance
Publication
SMU-SKBI Brown Bag, 06 August 2012, Singapore; Financial Management Association Doctoral Consortium, 17 October 2012, Atlanta
First Page
1
Last Page
51
City or Country
Atlanta, GA
Citation
LEE, Yen Teik.
Social networks and risk taking: Evidence from corporate control activities. (2012). SMU-SKBI Brown Bag, 06 August 2012, Singapore; Financial Management Association Doctoral Consortium, 17 October 2012, Atlanta. 1-51.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5661
Copyright Owner and License
Author
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.