The effect of board size on shareholder value: Evidence from bank mergers and acquisitions |
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| Institution: | 1. Department of Business Administration, University of Macedonia, 156 Egnatia Street, GR-546 36, Thessaloniki, Greece;2. School of Economics and Business, University of Thessaly, Argonafton & Filellinon, 382 21, Volos, Greece;3. Department of Business Administration, University of Piraeus, 80, M. Karaoli & A. Dimitriou St., 185 34, Piraeus, Greece;4. Department of Accounting and Finance, University of Macedonia, 156 Egnatia Street, GR-546 36, Thessaloniki, Greece |
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| Abstract: | This study examines the effect of board size on the economic impact of bank mergers and acquisitions (M&A) in the US. Using a hand-collected dataset of 508 M&A between 2012 and 2018, we find that board size is negatively related to acquirer excess returns. In an additional analysis, we show that large boards have positive value implications for banks that combine the CEO and chairman roles as well as for large banks. Our findings indicate that a “one-size-fits-all” approach to board size is not necessarily in the interests of shareholders; instead, a more flexible and proactive formulation is needed. |
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| Keywords: | Board of directors M&A Banks Agency theory Resource-dependence theory G14 G21 G34 |
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