Timely transactions The impact of board composition on firms sequential patterns of acquisitions and divestments
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2025-06-30
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en
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This study investigates how the rhythm of sequential acquisitions and divestments affects long-term financial performance, and examines how board composition moderates this relationship. Drawing on a temporal perspective in combination with agency theory, this research examines the moderating role of board independence, board size, and CEO duality. The analysis is based on fixed effects regression using panel data from 128 high-tech firms over a 17 year period (2005-2021). It was hypothesized that firms following a regular rhythm of sequential acquisitions and divestments would achieve higher performance due to reduced managerial overload, increased absorption capacity, and enhanced learning from previous experiences. Additionally, the effectiveness of a regular rhythm was expected to depend on board composition. Where firms with stronger governance structures would better be able to monitor and guide the individual decisions of acquisitions and divestments within this sequence pattern. Therefore, it was expected that board composition moderates this relationship in a way that firms with less agency problems are better able to benefit form this. Although no statistically significant relationships were found, the results question the benefits of regular rhythms which may enhance long-term financial performance in dynamic environments. This highlights the need for a more nuanced view of regularity and how board composition interacts with the temporal structuring of corporate restructuring activities such as acquisitions and divestments. In Addition to traditional agency theory, future research could benefit from different theories which assume more alignment between the board and the CEO, potentially offering alternative explanations for the role of board structures in shaping strategic rhythms.
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Faculteit der Managementwetenschappen