XXVI Edition

14-15-16 December 2017"

Do Board Characteristics Play a Moderating Role in M&A Decisions of Family Firms? A principal-principal conflicts perspective

Ladkani Radha, Indian Institute of Management Indore
Raithatha Mehul, Indian Institute of Management Indore

We study the effect of family ownership and board characteristics on the mergers and acquisitions (M&A) decisions of Indian firms. We find that family firms are less likely to undertake M&A than non-family firms. However, favourable board characteristics moderate the aversion of family firms towards M&A, and thus reduce principal-principal conflicts between family owners and minority shareholders. Using pooled data on family and non-family firms in India, we document that family firms in India with more independent and busier boards are more likely to undertake M&A transactions. Results also indicate that family firms with boards that meet more frequently or have non-duality between CEO and the Chairman have passive attitudes towards M&A transactions.

Area: Corporate Governance (Nedcommunity Award)

Keywords: Family firms, Board characteristics, mergers and acquisitions, India.

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