Does CFO Board Membership Benefit Shareholders? The Case of Corporate Acquisitions

Zhong Chen, Zicheng Lei, Chunling Xia

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Abstract

We investigate whether CFOs serving on U.S. corporate boards benefit shareholders in M&A transactions. We find that acquisitions made by firms with CFOs on boards have significantly better acquirer announcement returns. This is due to the CFO director’s ability to select targets with better strategic and financial fit. CFO board membership can create shareholder value if there are effective governance regimes restraining managerial entrenchment and CFOs’ interests are closely aligned with those of shareholders through equity ownership. Furthermore, sitting on boards enables CFOs to secure more and cheaper financing for their acquisitions.
Original languageEnglish
JournalJOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS
Early online date13 Feb 2024
DOIs
Publication statusE-pub ahead of print - 13 Feb 2024

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