Co-opted board and market reactions to acquisition announcements: the role of deal characteristics
| Panel A: public and private deals | ||||||
|---|---|---|---|---|---|---|
| Public deal | Private deal | Public deal | Private deal | Public deal | Private deal | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0080*** | −0.0053 | – | – | – | – |
| (−2.99) | (−1.63) | |||||
| NCO_OPT | – | – | −0.0007*** | −0.0005* | – | – |
| (−3.08) | (−1.68) | |||||
| RCO_OPT | – | – | – | – | −0.0073*** | −0.0047 |
| (−2.76) | (−1.44) | |||||
| CONSTANT | 0.0305 | −0.0195 | 0.0235 | −0.0236 | 0.0256 | −0.0224 |
| (1.34) | (−0.74) | (1.05) | (−0.87) | (1.13) | (−0.84) | |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| R2 | 0.0566 | 0.0502 | 0.0565 | 0.0501 | 0.0564 | 0.0500 |
| N | 5,563 | 3,376 | 5,563 | 3,376 | 5,563 | 3,376 |
| Panel A: public and private deals | ||||||
|---|---|---|---|---|---|---|
| Public deal | Private deal | Public deal | Private deal | Public deal | Private deal | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0080*** | −0.0053 | – | – | – | – |
| (−2.99) | (−1.63) | |||||
| NCO_OPT | – | – | −0.0007*** | −0.0005* | – | – |
| (−3.08) | (−1.68) | |||||
| RCO_OPT | – | – | – | – | −0.0073*** | −0.0047 |
| (−2.76) | (−1.44) | |||||
| CONSTANT | 0.0305 | −0.0195 | 0.0235 | −0.0236 | 0.0256 | −0.0224 |
| (1.34) | (−0.74) | (1.05) | (−0.87) | (1.13) | (−0.84) | |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| 0.0566 | 0.0502 | 0.0565 | 0.0501 | 0.0564 | 0.0500 | |
| 5,563 | 3,376 | 5,563 | 3,376 | 5,563 | 3,376 | |
| Panel B: all cash and all stock deals | ||||||
|---|---|---|---|---|---|---|
| All cash deal | All stock deal | All cash deal | All stock deal | All cash deal | All stock deal | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0060* | −0.0020 | ||||
| (−1.88) | (−0.30) | |||||
| NCO_OPT | −0.0005* | −0.0003 | ||||
| (−1.67) | (−0.65) | |||||
| RCO_OPT | −0.0056* | −0.0009 | ||||
| (−1.77) | (−0.14) | |||||
| CONSTANT | 0.0021 | 0.2169*** | −0.0020 | 0.2144*** | −0.0015 | 0.2155*** |
| (0.14) | (3.46) | (−0.12) | (3.42) | (−0.09) | (3.46) | |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| R2 | 0.0591 | 0.1106 | 0.0587 | 0.1108 | 0.0590 | 0.1106 |
| N | 2,793 | 1,258 | 2,793 | 1,258 | 2,793 | 1,258 |
| Panel B: all cash and all stock deals | ||||||
|---|---|---|---|---|---|---|
| All cash deal | All stock deal | All cash deal | All stock deal | All cash deal | All stock deal | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0060* | −0.0020 | ||||
| (−1.88) | (−0.30) | |||||
| NCO_OPT | −0.0005* | −0.0003 | ||||
| (−1.67) | (−0.65) | |||||
| RCO_OPT | −0.0056* | −0.0009 | ||||
| (−1.77) | (−0.14) | |||||
| CONSTANT | 0.0021 | 0.2169*** | −0.0020 | 0.2144*** | −0.0015 | 0.2155*** |
| (0.14) | (3.46) | (−0.12) | (3.42) | (−0.09) | (3.46) | |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| 0.0591 | 0.1106 | 0.0587 | 0.1108 | 0.0590 | 0.1106 | |
| 2,793 | 1,258 | 2,793 | 1,258 | 2,793 | 1,258 | |
| Panel C: related and unrelated deals | ||||||
|---|---|---|---|---|---|---|
| Related deal | Unrelated deal | Related deal | Unrelated deal | Related deal | Unrelated deal | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0091*** | −0.0057* | – | – | – | – |
| (−3.28) | (−1.88) | |||||
| NCO_OPT | – | – | −0.0009*** | −0.0005** | – | – |
| (−3.51) | (−1.96) | |||||
| RCO_OPT | – | – | – | – | −0.0082*** | −0.0052* |
| (−2.98) | (−1.73) | |||||
| CONSTANT | 0.0053 | 0.0084 | −0.0018 | 0.0031 | 0.0002 | 0.0047 |
| (0.25) | (0.64) | (−0.09) | (0.23) | (0.01) | (0.36) | |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| R2 | 0.0566 | 0.0445 | 0.0566 | 0.0444 | 0.0562 | 0.0444 |
| N | 4,715 | 4,224 | 4,715 | 4,224 | 4,715 | 4,224 |
| Panel C: related and unrelated deals | ||||||
|---|---|---|---|---|---|---|
| Related deal | Unrelated deal | Related deal | Unrelated deal | Related deal | Unrelated deal | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0091*** | −0.0057* | – | – | – | – |
| (−3.28) | (−1.88) | |||||
| NCO_OPT | – | – | −0.0009*** | −0.0005** | – | – |
| (−3.51) | (−1.96) | |||||
| RCO_OPT | – | – | – | – | −0.0082*** | −0.0052* |
| (−2.98) | (−1.73) | |||||
| CONSTANT | 0.0053 | 0.0084 | −0.0018 | 0.0031 | 0.0002 | 0.0047 |
| (0.25) | (0.64) | (−0.09) | (0.23) | (0.01) | (0.36) | |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| 0.0566 | 0.0445 | 0.0566 | 0.0444 | 0.0562 | 0.0444 | |
| 4,715 | 4,224 | 4,715 | 4,224 | 4,715 | 4,224 | |
| Panel D: large and small deals | ||||||
|---|---|---|---|---|---|---|
| Large deal | Small deal | Large deal | Small deal | Large deal | Small deal | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0115*** | −0.0045* | – | – | – | – |
| (−3.68) | (−1.69) | |||||
| NCO_OPT | – | – | −0.0011*** | −0.0004 | – | – |
| (−3.85) | (−1.45) | |||||
| RCO_OPT | – | – | – | – | −0.0106*** | −0.0041 |
| (−3.43) | (−1.52) | |||||
| CONSTANT | −0.0275 | 0.0241 | −0.0369 | 0.0208 | −0.0343 | 0.0214 |
| (−1.01) | (1.35) | (−1.31) | (1.15) | (−1.25) | (1.19) | |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| R2 | 0.0847 | 0.0305 | 0.0846 | 0.0303 | 0.0843 | 0.0304 |
| N | 4,431 | 4,508 | 4,431 | 4,508 | 4,431 | 4,508 |
| Panel D: large and small deals | ||||||
|---|---|---|---|---|---|---|
| Large deal | Small deal | Large deal | Small deal | Large deal | Small deal | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0115*** | −0.0045* | – | – | – | – |
| (−3.68) | (−1.69) | |||||
| NCO_OPT | – | – | −0.0011*** | −0.0004 | – | – |
| (−3.85) | (−1.45) | |||||
| RCO_OPT | – | – | – | – | −0.0106*** | −0.0041 |
| (−3.43) | (−1.52) | |||||
| CONSTANT | −0.0275 | 0.0241 | −0.0369 | 0.0208 | −0.0343 | 0.0214 |
| (−1.01) | (1.35) | (−1.31) | (1.15) | (−1.25) | (1.19) | |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| 0.0847 | 0.0305 | 0.0846 | 0.0303 | 0.0843 | 0.0304 | |
| 4,431 | 4,508 | 4,431 | 4,508 | 4,431 | 4,508 | |
| Panel E: foreign deals | ||||||
|---|---|---|---|---|---|---|
| Foreign deals | Domestic deals | Foreign deals | Domestic deals | Foreign deals | Domestic deals | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0077** | −0.0071*** | – | – | – | – |
| (−2.08) | (−3.02) | |||||
| NCO_OPT | – | – | −0.0007** | −0.0007*** | – | – |
| (−2.17) | (−3.11) | |||||
| RCO_OPT | – | – | – | – | −0.0071* | −0.0064*** |
| (−1.95) | (−2.73) | |||||
| CONSTANT | 0.0514** | 0.0075 | 0.0454** | 0.0015 | 0.0464** | 0.0034 |
| (2.43) | (0.40) | (2.17) | (0.08) | (2.20) | (0.18) | |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| R2 | 0.0537 | 0.0436 | 0.0535 | 0.0435 | 0.0535 | 0.0434 |
| N | 2,266 | 6,673 | 2,266 | 6,673 | 2,266 | 6,673 |
| Panel E: foreign deals | ||||||
|---|---|---|---|---|---|---|
| Foreign deals | Domestic deals | Foreign deals | Domestic deals | Foreign deals | Domestic deals | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0077** | −0.0071*** | – | – | – | – |
| (−2.08) | (−3.02) | |||||
| NCO_OPT | – | – | −0.0007** | −0.0007*** | – | – |
| (−2.17) | (−3.11) | |||||
| RCO_OPT | – | – | – | – | −0.0071* | −0.0064*** |
| (−1.95) | (−2.73) | |||||
| CONSTANT | 0.0514** | 0.0075 | 0.0454** | 0.0015 | 0.0464** | 0.0034 |
| (2.43) | (0.40) | (2.17) | (0.08) | (2.20) | (0.18) | |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| 0.0537 | 0.0436 | 0.0535 | 0.0435 | 0.0535 | 0.0434 | |
| 2,266 | 6,673 | 2,266 | 6,673 | 2,266 | 6,673 | |
Note(s): This table presents the regression results of the effect of co-opted board on acquisition performance with other control variables for public and private deals in Panel A, all cash and all stock deals in Panel B, related and unrelated deals in Panel C and large and small deals in Panel D, and foreign and domestic deals in Panel E. Robust two-tailed t-statistics clustered by firm are presented in parentheses. The superscripts ***, ** and * correspond to statistical significance at the 1%, 5% and 10% levels, respectively. We present the variable definitions in the Appendix
Source(s): Authors’ own work
Sharing content requires targeting cookies to be enabled. Please update your cookie preferences to use this feature.