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"Target Director Turnover in Acquisitions: A Conceptual Framework"

Yong Li and Ruth V. Aguilera

 

First Author :

Yong Li
Strategic Management
State University of New York at Buffalo, School of Management
326B Jacobs Management Center
Amherst, NY 14260
USA

716-645-2522

YL67@buffalo.edu


Second Author :

Ruth V. Aguilera
Business Administration
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth Street
350 Wohlers Hall, MC 706
Champaign, IL 61820
USA

217-333-7090

ruth-agu@uiuc.edu

http://www.business.uiuc.edu/faculty/aguilera.html

 
 
Abstract :
 
Manuscript Type: Conceptual Research Question/Issue: Director turnover post-acquisition is a complex and multi-faceted phenomenon that needs to be examined beyond the agency lens. In this article, we examine the likelihood of non-executive director turnover in target firms following an acquisition. Research Findings/Insight: Acquisitions present an interesting case where conflict of interests may arise between shareholders and directors. This study proposes that the likelihood of target non-executive director turnover depends on the factors that determine the performance of directors in their monitoring, advisory and social roles pre-acquisition and during the acquisition process. Theoretical/Academic Implications: While there are multiple studies examining the likelihood of turnover of executive directors (TMTs) following an acquisition, there is no systematic conceptual research explaining the likelihood of turnover of non-executive directors. We draw on three theoretical perspectives--agency theory, resource based view and the social capital perspective to comprehensively investigate target non-executive director turnover postacquisition. We further clarify the boundaries of these theoretical arguments concerning their implications for target non-executive director turnover. Practitioner/Policy Implications: One of the most important tasks for the newly formed firm post-acquisition is to build the new leadership team, including a new board. In view of the important roles directors take on in modern corporations, it is critical to understand how the new board should be constituted and what members of the target firm are more likely to join that new board.
 
 
Keywords :
 
acquisition, director roles, non-executive director, turnover
 
 
Footnotes & Acknowledgements :
 
Conditionally accepted at Corporate Governance: An International Review
 
 
Manuscript Received : 2008
Manuscript Published : May 15, 2008
 
 
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