On the likelihood and type of merger and acquisition in the US listed companies: the role of females on the board

Published date04 April 2022
Date04 April 2022
Subject MatterAccounting & finance,Accounting/accountancy,Accounting methods/systems
AuthorYousry Ahmed,Yu Song,Mohamed Elsayed
On the likelihood and type of
merger and acquisition in the US
listed companies: the role of
females on the board
Yousry Ahmed
Accounting and Finance Department, Newcastle University, Newcastle upon Tyne,
UK and Faculty of Commerce, Zagazig University, Zagazig, Egypt
Yu Song
Taiyuan University of Technology, Taiyuan, China, and
Mohamed Elsayed
Queens Management School, Queens University Belfast, Belfast, UK and
Accounting Department, Mansoura University, Mansoura, Egypt
Purpose This paper aims to examine whetherand how females on the board of directors affect US-listed
companiesmergerand acquisition (M&A) decisions. Specically,the paper concerns the impact of females in
the boardroom on the likelihood and type of M&A deals (i.e. foreign vs domesticacquisitions and listed vs
Design/methodology/approach Archival data of M&A deals using a sample of 17,899 rm-year
observations of the US public companies from 2012 to 2018 are collected and examined using probit and logit models.
Findings This paper offers three main resultssupporting the propositions of the behavioral consistency
theory. First,female directors are negatively associated withthe likelihood of making the acquisition. Second,
female directors are positivelyassociated with acquiring domestic rather thanforeign targets. Third, female
directorsare positively associated with acquiringlisted rather than unlisted targets.
Research limitations/implications The ndings provideadditional evidence-based insights into the
debate aboutdiversity on boards with the aim of informing policyand offering practical recommendationsfor
the effectiveimplementation of gender diversity on the boards of companies.
Originality/value Overall, consistent with the premise of behavioral theory, the results expand the
literature on gender diversity by augmenting the argument that femalesbehavior in corporate policies is
viewed as oppositionto change and a tendency toward risk aversion and thus,inuences companiesstrategic
investmentdecisions, such as M&A.
Keywords Gender diversity, Female directors, Foreign acquisitions, Domestic acquisitions,
Listed acquisitions, Unlisted acquisitions
Paper type Research paper
*The authors would like to thank Andrey Golubov, Tamer Elshandidy, Kirak Kim, Piotr Korczak,
Jon Tucker and participants at Newcastle University Business School and Queens University Belfast
Management School seminars for their insightful comments and constructive suggestions.
Compliance with ethical standards conict of interest: The authors declared that they have no
conicts of interest. This research did not receive any specic grant from funding agencies in the
listed, commercial or not-for-prot sectors.
Role of females
on the board
Received7 October 2021
Revised15 February 2022
Accepted8 March 2022
InternationalJournal of
Accounting& Information
Vol.30 No. 3, 2022
pp. 391-407
© Emerald Publishing Limited
DOI 10.1108/IJAIM-10-2021-0205
The current issue and full text archive of this journal is available on Emerald Insight at:
1. Introduction
Regulatory recommendations,in recent years, have resulted in a growing number of females
taking part in economic activitiesand playing pivotal roles in modern companiesworldwide
(FRC, 2021;Khatib et al.,2021a;Nguyen et al., 2020). For example, since 2003, in Norway, the
law mandates at least 40% of directors on the board to be women (Ahern and Dittmar,
2012). In 2019, females held 20% of board seats worldwide; women took 21.3% (26%) of
board seats in Fortune 1000 (S&P 500) companies in 2018 (Catalyst, 2020). In the rst
quarter of 2021, women hold 24.4% of corporate board seats on the Russell 3000 Index
(5050wob, 2021). Expectedly, by 2029, women may comprise 30%50% of corporate
boards (MSCI, 2020).
Previous research (Adamsand Ferreira, 2009) indicates that, compared to males, females
unique behavioral traits are associated with good governance practices (e.g. better board
attendance record and more active to join monitoring committees). Additionally, prior
studies (Brahma et al.,2020;Perryman et al.,2016;Huang and Kisgen,2013 Boulouta,2013)
suggest a positive (negative) association between gender diversity and rm performance
(risk), implying that gender diversity in the boardroom is an important mechanism to
monitor and control managers. Conversely,another branch of research (Ahern and Dittmar,
2012;Sila et al.,2016)nds conicting, negative or no evidence of that association.
Therefore, understandingthe impact of gender diversity in strategic investment decisions
such as merger and acquisition (M&A) deals that entail a high level of complexity and
uncertainty about their outcomes(Nadolska and Barkema, 2014)is important to rene the
ongoing regulatory debates and mixedevidence provided by previous studies. Specically,
this paper investigates the effect of gender diversityin the boardroom on the likelihood and
type of M&A deals.
M&A is a combination of two or more companies into one new corporation or company
(Roberts et al., 2010)[1]. M&A has a vital effect on both the economy and the rm. On the
economy level, M&As signicantly affect economic welfare through their inuence on
capital, product, labor and global markets (Bruner and Perella, 2004;Bjorvatn, 2004;
Cartwright and Cooper, 2014;UNCTAD, 2000). On the rm level, companies become
involved in M&A transactions to expand beyond the extent of their organic growth and to
survive in a competitive, global world (Chadam, 2019), although some studies suggest that
acquisition is likely to destroy the value of acquiring rms (Chen et al., 2016). Thus, M&A
deals are among the most signicant corporatedecisions and statistics show signicant and
rapid growth in M&A deals in recent years(Murugaboopathy and Dogra, 2021;Ahmed and
Elshandidy, 2021)[
This motivates a wide range of research on M&A, mainly concerning acquisition size,
premium and outcome (Li et al., 2018;Ahmed and Elshandidy, 2016;Ferris et al.,2013;
Morellec and Zhdanov, 2008;Khatami et al.,2015). Furthermore, in terms of examining
gender diversity effectson M&A decisions and outcomes, Levi et al. (2014) examine whether
the gender of chief executive ofcers(CEOs) or corporate directors plays a role in the pricing
of and returns on a sample of M&A deals in Europe and nd that rms with female CEOs
are associated with lower bid premium and better abnormal returns.Hummel (2018) nds a
negative relationship between gender diversity and the bid premium and the size of the
target company.
That said, to the best of our knowledge, limited, if any, research has investigated the
relationship between females on the board and M&A-related corporate decisions. In
particular, this paper aims to contribute to the literature on gender diversity and M&A by
examining how females on the board inuence rmslikelihood of making future M&A

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