Mergers and the Market for Busy Directors: An International Analysis

Using 13,233 acquisitions from 57 countries, we examine M&A decisions made by busy boards. We find that few busy acquirers originate from emerging markets and that they tend to undertake cross-border mergers, favor public targets, finance with cash and equity, pursue non-diversifying mergers, avoid targets with multiple bidders, and long-term underperform relative to non-busy acquirers. Importantly, we discover a non-linear relation between an acquirer’s board busyness and announcement returns. We find that the labor market penalizes directors who approve bad acquisitions, but does not reward them for good mergers. We observe that acquirers with busy boards consistently underperform.