Board Changes and the Director Labor Market: The Case of Mergers

Board Changes and the Director Labor Market: The Case of Mergers

Jared Wilson, Ralph Walking, David Becher

Series number :

Serial Number: 
498/2017

Date posted :

March 14 2017

Last revised :

August 20 2018
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Keywords

  • Mergers and acquisitions; Boards of directors; Director labor market

Mergers offer an ideal setting to examine motives for director selection by providing a welldefined pool of possible candidates for the post-merger board. We find that changes to boards around mergers are significant and reflect firms’ increased complexity. Post-merger boards experience an increase in director expertise tied to managing and monitoring more complex firms.

Directors selected have more of these characteristics than those considered but not selected. These effects increase with deal complexity in ways consistent with firm-need, even after controlling for other motivations. Our evidence demonstrates the importance of changing monitoring and advising needs in the demand for directors.

Authors

Real name: 
David Becher
Drexel University, LeBow College of Business
Real name: 
Ralph Walking
Drexel University, LeBow College of Business
Real name: 
Jared Wilson
Indiana University, Kelley School of Business