This paper aims to examine whether and how females on the board of directors affect US-listed companies’ merger and acquisition (M&A) decisions. Specifically, the paper concerns the impact of females in the boardroom on the likelihood and type of M&A deals (i.e. foreign vs domestic acquisitions and listed vs unlisted acquisitions).
Archival data of M&A deals using a sample of 17,899 firm-year observations of the US public companies from 2012 to 2018 are collected and examined using probit and logit models.
This paper offers three main results supporting the propositions of the behavioral consistency theory. First, female directors are negatively associated with the likelihood of making the acquisition. Second, female directors are positively associated with acquiring domestic rather than foreign targets. Third, female directors are positively associated with acquiring listed rather than unlisted targets.
The findings provide additional evidence-based insights into the debate about diversity on boards with the aim of informing policy and offering practical recommendations for the effective implementation of gender diversity on the boards of companies.
Overall, consistent with the premise of behavioral theory, the results expand the literature on gender diversity by augmenting the argument that females’ behavior in corporate policies is viewed as opposition to change and a tendency toward risk aversion and thus, influences companies’ strategic investment decisions, such as M&A.
