The Impact of Director Reputation and Performance on the Turnover and Board Seats of Target Firm Directors

Authors

  • Dr Martin Bugeja,

    1. The first author is from the University of Sydney. The second and third authors are from the University of Western Australia. They acknowledge the helpful comments and suggestions of an anonymous referee, the editor Peter Pope, Philip Brown and participants at seminars held at the University of Western Australia Business School and University of Sydney. They also wish to thank Whitney Hudson for her editorial assistance. This study benefited from funding received from an Australian Research Council Discovery Grant.
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  • Raymond Da Silva Rosa,

    1. The first author is from the University of Sydney. The second and third authors are from the University of Western Australia. They acknowledge the helpful comments and suggestions of an anonymous referee, the editor Peter Pope, Philip Brown and participants at seminars held at the University of Western Australia Business School and University of Sydney. They also wish to thank Whitney Hudson for her editorial assistance. This study benefited from funding received from an Australian Research Council Discovery Grant.
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  • Andrew Lee

    1. The first author is from the University of Sydney. The second and third authors are from the University of Western Australia. They acknowledge the helpful comments and suggestions of an anonymous referee, the editor Peter Pope, Philip Brown and participants at seminars held at the University of Western Australia Business School and University of Sydney. They also wish to thank Whitney Hudson for her editorial assistance. This study benefited from funding received from an Australian Research Council Discovery Grant.
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Address for correspondence: Martin Bugeja, Discipline of Accounting, H69, Faculty of Economics and Business, University of Sydney, NSW, 2006, Australia. e-mail: m.bugeja@econ.usyd.edu.au

Abstract

Abstract:  This study examines factors that explain the turnover and board seats held by target firm directors post-takeover. Following successful takeovers the proportion of the board replaced is lower when the target has better performance. In failed takeovers, executive directors have lower turnover and the rate of turnover is reduced after a hostile takeover. Inconsistent with ex-post settling-up, actions that advance target shareholder wealth during the takeover does not assist a director obtain an increase in future board seats. Confirming a reputation effect, directors with multiple directorships have a lower rate of turnover and a higher increase in future board seats.

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