The effect of tenure and age diversity in corporate boards on M&A premiums

Abstract

Using a comparatively large sample of North American M&A transactions, I examine the effect of acquirer boards’ tenure and age diversities on M&A premium. Going against the general understanding of the value-enhancing contribution of board diversity in corporate boards, my finding concludes that both tenure and age diversity in acquirer corporate boards are associated with an increase in M&A premium. Also, boards with more tenure and age diversity are associated with taking longer time to complete M&A deals. Thus, my results suggest that certain types of diversity may be wealth-destroying, at least when it comes to corporate mergers. My results are backed by a battery of robustness and endogeneity tests.