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COSTS AND BENEFITS OF “FRIENDLY” BOARDS DURING MERGERS AND
ACQUISITIONS
by
Breno Schmidt
A Dissertation Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(BUSINESS ADMINISTRATION)
May 2009
Copyright 2009 Breno Schmidt
Object Description
| Title | Costs and benefits of "friendly" boards during mergers and acquisitions |
| Author | Schmidt, Breno |
| Author email | breno.schmidt@gmail.com; brenosch@usc.edu |
| Degree | Doctor of Philosophy |
| Document type | Dissertation |
| Degree program | Business Administration |
| School | Marshall School of Business |
| Date defended/completed | 2009-03-31 |
| Date submitted | 2009 |
| Restricted until | Unrestricted |
| Date published | 2009-04-29 |
| Advisor (committee chair) | Matsusaka, John |
| Advisor (committee member) |
DeAngelo, Harry Ozbas, Oguzhan Matos, Pedro Leshem, Shmuel |
| Abstract | Although recent regulations call for greater board independence, finance theory predicts that independence is not always in the shareholders' interest. In situations where it is more important for the board to provide advice than to monitor the CEO, more independent directors can decrease firm value because the CEO is not willing to share inside information with independent directors. I test this prediction by examining the connection between takeover returns and board friendliness using social ties between the CEO and board members as a proxy for less independent, more friendly boards. I find that social ties are associated with higher bidder announcement returns when advisory needs are high but with lower returns when monitoring needs are high. These effects intensify as the proportion of the board socially connected to the CEO increases and are not driven by correlations between social ties and other board characteristics. The evidence suggests that friendly boards can have both costs and benefits depending on the specific needs of the company. |
| Keyword | governance; social networks; mergers and acquisitions |
| Language | English |
| Part of collection | University of Southern California dissertations and theses |
| Publisher (of the original version) | University of Southern California |
| Place of publication (of the original version) | Los Angeles, California |
| Publisher (of the digital version) | University of Southern California. Libraries |
| Provenance | Electronically uploaded by the author |
| Type | texts |
| Legacy record ID | usctheses-m2125 |
| Rights | Schmidt, Breno |
| Repository name | Libraries, University of Southern California |
| Repository address | Los Angeles, California |
| Repository email | http://www.usc.edu/isd/libraries/services/ask_a_librarian/email/ |
| Filename | etd-Schmidt-2873 |
| Archival file | uscthesesreloadpub_Volume26/etd-Schmidt-2873.pdf |
Description
| Title | Page 1 |
| Full text | COSTS AND BENEFITS OF “FRIENDLY” BOARDS DURING MERGERS AND ACQUISITIONS by Breno Schmidt A Dissertation Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PHILOSOPHY (BUSINESS ADMINISTRATION) May 2009 Copyright 2009 Breno Schmidt |
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