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Some Directors are More Equal than Others: Board Social Structure as a Moderator of Elite Director Bias in Acquisition Premium Decisions

Balasubramanian, Midhubalan (2019) Some Directors are More Equal than Others: Board Social Structure as a Moderator of Elite Director Bias in Acquisition Premium Decisions. Doctoral Dissertation, University of Pittsburgh. (Unpublished)

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Acquisition premium decisions are an important consideration for value creation and firm performance. In this research tradition, the formal position of CEOs is considered an enabler of outsize influence and treated as a critical factor affecting acquisition premium decisions. In this study, I consider the possibility of board members’ external network positions functioning as a basis for influence. Highly central positions enable directors to exert outsize influence on the decision. The salience of external information for acquisition premium decisions and role of directors as conduits to external network resources and information underlie this idea. I theorize that the elite director, i.e. the director with the highest network centrality on the board, exerts an outsize influence on acquisition premium decisions of the board. More specifically, I propose that the elite director’s bias on acquisition premiums affect the board’s acquisition premium shift. I identify cohesive and hierarchical board structures as critical for sustaining board social dynamics that counteract elite director bias. Positive affect sustained in cohesive boards and weak social integration in hierarchical boards affect the ability of elite director to assert bias. I find empirical support for the relationship between elite director bias and premium shift as well as the moderating effect of cohesive board structure on that relationship. The study contributes to the literature on outsize influence by highlighting social network characteristics as a key alternative to demographic characteristics. The study makes two key contributions to managerial practice: (1) It highlights that social positions that come with no formal title can also function as a basis for outsize influence and affect group decisions. (2) It introduces board cohesion and hierarchy as key structural considerations for director selection and board composition decisions.


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Item Type: University of Pittsburgh ETD
Status: Unpublished
CreatorsEmailPitt UsernameORCID
Balasubramanian, Midhubalanmib75@pitt.edumib75
ETD Committee:
TitleMemberEmail AddressPitt UsernameORCID
Committee MemberCohen, Susan
Committee MemberFraundorf,
Committee ChairMadhavan,
Committee MemberMehra,
Committee MemberPrescott, John
Date: 26 June 2019
Date Type: Publication
Defense Date: 11 April 2019
Approval Date: 26 June 2019
Submission Date: 20 May 2019
Access Restriction: No restriction; Release the ETD for access worldwide immediately.
Number of Pages: 61
Institution: University of Pittsburgh
Schools and Programs: Joseph M. Katz Graduate School of Business > Business Administration
Degree: PhD - Doctor of Philosophy
Thesis Type: Doctoral Dissertation
Refereed: Yes
Uncontrolled Keywords: outsize influence, board decision-making, acquisition premiums
Date Deposited: 26 Jun 2019 18:06
Last Modified: 10 Jun 2024 18:26


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