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Cambridge Endowment for Research in Finance (CERF)


Bang Dang Nguyen

Title of research: Social Networks, Risk Taking, and Firm Value:  Evidence from Corporate Control Activities

This project investigates the impact of social ties between the Chief Executive Officer (CEO) and board members on corporate risk-taking in mergers and acquisitions (M&As) and on shareholder value. Using a measure of CEO-director connections in a large sample of U.S. firms from 2000 to 2011, we study whether boardroom connections lower firm acquisitiveness. We investigate if connected CEOs are likely to choose focus and value-creating acquisitions, and to pursue smaller M&A deals and pay in stock. We also study if CEO-board connections enhance firm value in M&As by analyzing announcement returns, premium paid, and deal completion time.

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Research Update - Report 2014