The effect of the board of directors' characteristics on merger and acquisition investments : evidence from the United Kingdom

This thesis relies on the three-paper approach, where all three papers has a broader aim of determining the extent of the effect of female directors' characteristics on merger and acquisition (M&A) investments. The first paper (chapter 2) represents a systematic literature review of 179 articles that focused on how the board of directors' characteristics affect M&A investments. The aim of this study was to synthesise the articles on this topic into one paper and to identify the gaps for possible future work. Seven main themes were identified: (1) individual-level factors, (2) firm-level factors, (3) board independence, (4) experience, (5) connections, (6) ownership, and (7) compensation. Three main limitations were identified from the literature: methodological and sample, theoretical, and empirical limitations. First, for the methodological and sample limitations, future studies are recommended to examine developing markets, separate financial from non-financial firms, adopt more qualitative studies, and study the effect of the board of directors' characteristics on the bondholders within the M&A context. Second, for the theoretical limitations, future studies should engage the relevant theories with their hypotheses and combine several theories in their studies. Third, for the empirical limitations, future studies are recommended to use more than one factor to drive their findings, consider the long-term and accounting performance measures, and cover the aspects not addressed yet. In the second paper (chapter 3), a sample of 256 acquisition deals from publicly listed nonfinancial UK firms were used. The findings suggest that different female directors have different effects on the risk of M&A deals proxied by using cash as the payment method, making crossborder deals, and paying a high premium. Independent female directors with a long career horizon, high educational level, short tenure, and domestic nationality are more likely to be risktakers in M&A deal than their female counterparts. Moreover, the gender of the independent directors within the same characteristic category had a different effect on risk-taking behaviour. The study also covers other possible interpretations of the findings. Proceeding with the same sample as in paper 2, the third paper (chapter 4) suggests that different female directors have different effects on acquisition efficiency proxied by return on assets. Independent female directors with a short career horizon, low educational level, short tenure, and foreign nationality are more likely to enhance acquisition efficiency than their counterpart female directors. Moreover, the gender of the independent directors in the same characteristic category had different effects on acquisition efficiency.