Internal Corporate Control and the Dynamics of Post-Acquisition Boards: Evidence of U.S. Life Insurers

We study the role of target insurer boards and the post-acquisition retention of target directors in U.S. life insurer mergers and acquisitions. Our results indicate that board characteristics affect the likelihood of acquisition. Smaller boards, boards with better reputations and boards without CEO dominance are more likely to agree to acquisition. Boards with a larger proportion of outside directors are less likely to agree to acquisition, especially when firms perform well. In terms of post-acquisition director retention, we find that outside directors are more likely to lose their seats after acquisition, especially when firms underperform. Directors holding more directorships in other firms or having experience as top management are more likely to be retained. Outside directors are less likely to be retained if they are from a firm with CEO duality, and inside directors are more likely to be replaced if the takeover is disciplinary.