Gender quota and M&A activity: The role of networks

Abstract

Gender equality plays an increasingly prominent role in corporate leadership. Prior research has shown that female directors may be less prone to overconfidence and less prepared to take risks compared to their male counterparts, which may benefit firm performance. In this context, a growing number of Western European countries adopted gender quotas over the past 20 years. However, in the current literature, the potential benefits of such quota are not unanimously supported. Using a multilevel analysis, I investigate how the presence of female directors and the adoption of gender quota may affect M&As done by European acquirers and how bid premiums paid by these acquirers could be affected by the presence of female board members. Moreover, I investigate the possible moderating role of female directors’ networks, as these networks may impact the information provision and therefore the ability to make decisions regarding the value of a merger or an acquisition. The main findings show that an increase in gender diversity negatively affects the premium in countries with a gender quota, but positively affects bid premiums in countries without a gender quota. Female directors’ networks do not appear to moderate the relationship between gender diversity and bid premium.