Board neutrality and the market for corporate control: evidence from international shocks

초록

Using staggered country-level shocks to the enforcement of board neutrality rules (BNR) across 32 countries from 1996 to 2019, I examine how restricting board-level takeover defences influences the market for corporate control. I find that BNR is associated with some positive M&A outcomes: the probability of receiving a bid increases by 18.7%, deal completion rates rise by 6.7%, and targets receive 4.2% higher premiums. Furthermore, acquisitions following BNR enforcement are associated with lower subsequent goodwill impairments and fewer divestitures. These findings suggest that BNR may streamline M&A efficiency by reducing board entrenchment and facilitating more rigorous due diligence.

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