The Effect of Gender Quota Laws on Mergers & Acquisitions. A Comparision Within Europe

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Prior research has proven that many mergers and acquisitions are not value enhancing or sometimes even value destroying. Unsuccessful deals are often done by overconfident and sometimes greedy directors who tend to overpay for their targets. These could be seen as masculine characteristics. Female directors tend to be less overconfident and are more risk averse. This raises the question if women in corporate boards have an influence on the mergers and acquisitions done by firms. Furthermore, many European countries have introduced gender quota laws in recent years in order to solve the under representation of women in corporate boards. However, there has been a lot of criticism on these gender quota laws. Could these gender quota laws affect the mergers and acquisitions done by firms? This paper examines the effects of female board representation and gender quota laws on the bid initiations done by firms and on the target sizes. It aims to expose the possible consequences of gender quota laws for mergers and acquisitions in order to contribute to the political debate about quotas. The main findings of this research are contradictory. A higher fraction of female directors leads to more bid initiations and higher target sizes. Moreover, gender quota laws have a beneficial influence on the sizes of target firms. However, detrimental consequences of gender quota laws are found for the bid initiations done by firms.
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