Abstract
We examine the link between board structure and bid-induced abnormal returns for a sample of 198 UK-based firms that became takeover targets between 1989 and 1998. As expected, takeover targets experience significant gains during the takeover announcement period. In line with a disciplinary explanation for takeovers, we find that target boards that are larger, with fewer independent directors, and a managing director chairman, experience more favorable announcement-period returns. Targets with more reputable directors and directors with greater ownership incentives, also experience more favorable announcement-period returns
Subject
General Business, Management and Accounting
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