Should the old boys’ network change: the M&A perspective

Abstract

The corporate environment can be described as an old boys’ network. However, this does seem to be changing as the number of female CEOs and female board members has been increasing. In addition, there has been higher social and institutional pressure for change. Therefore, it is important to know what effect a higher share of women in top positions can have on corporate behavior. This study focuses on corporate behavior during the M&A process, as M&A is one of the biggest decisions a firm can make. Most existing literature on the M&A process focuses on the effects of firm and market characteristics. The goal of this study, however, is to add to the literature on the effects of gender characteristics, by investigating gender differences in risk taking during the M&A process. In addition, the role of board gender diversity is investigated. This study empirically analyzes a sample of 870 deals done by S&P 500 firms in the period 2015-2019. The results indicate that gender differences are apparent in the choice of payment (cash vs. stock) as well as for the choice of target type (private vs. public). In addition, this study investigates whether board gender diversity moderates these gender differences. The results are more unclear, as only for the choice of target type a significant moderating effect was found. The results of this study therefore strengthen existing evidence on gender differences in corporate behavior, especially during the M&A process and can therefore serve as arguments for more gender quotas. Moreover, it adds to the existing literature by investigating the moderating role of board gender diversity, on which literature is relatively scarce.