Three essays on corporate finance
This paper investigates the impact of social ties between the Chief Executive Officer (CEO) and board members on corporate risk-taking in mergers and acquisitions (M&As) and on shareholder value. Using a measure of CEO-director connections in a large sample of U.S. firms from 2000 to 2010, we document that boardroom connections lower firm acquisitiveness. If connected CEOs undertake 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 boardroom connection are associated with lower announcement returns and lower subsequent return on assets. Our results are robust to alternative explanations and various robustness checks.
The dissertation comprises 3 papers, available at:
1. Social networks and risk taking: Evidence from corporate control activities (2012) working paper
2. Are bond ratings informative? Evidence from regulatory regime changes (2018) working paper
3. Governance and post-repurchase performance (2016) Journal of Corporate Finance. 39, 155-173.