Ahmed, Rehan (2026) Who Stays and Who Gains? Director Retention and Long-Term Value Creation After M&A. Masters thesis, Concordia University.
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Abstract
Retaining a target firm director by the acquirer following an M&A transaction is often justified on the grounds of preserving firm-specific knowledge and maintaining operational continuity. Critics, however, suggest that it can introduce conflict in the boardroom if the retained directors are more adherent to legacy ties and less aligned with the acquirer’s post-merger objectives. To test which theory dominates, this study constructs a sample of 757 mergers involving U.S.-based public companies announced between 2014 and 2024. Director retention is defined as cases where at least one target director joins the acquirer’s board following the transaction. Post-acquisition performance is measured using Long-Term Investor Value Appropriation (LIVA), which is the discounted sum of excess shareholder returns. LIVA is evaluated over one-, two-, three-, and five-year horizons to provide a complete trajectory of post-merger value creation over the coming years. Empirically, the results indicate a consistently negative, but statistically weak, association between director retention and post-merger value creation across most time horizons. Importantly, the direction of the coefficients stays stable across specifications, including for the controls for director demographics, suggesting that these director characteristics do not meaningfully moderate the relationship. The results are consistent with agency theory, as board entrenchment and misaligned incentives can often dominate the positive effects of continuity, resulting in destroyed shareholder value for the acquiring company following the acquisition.
| Divisions: | Concordia University > John Molson School of Business > Finance |
|---|---|
| Item Type: | Thesis (Masters) |
| Authors: | Ahmed, Rehan |
| Institution: | Concordia University |
| Degree Name: | M. Sc. |
| Program: | Finance |
| Date: | April 2026 |
| Thesis Supervisor(s): | Ullah, Saif |
| Keywords: | Mergers and Acquisitions, Corporate Governance, Corporate Governance, Post-Acquisition Performance, Value Creation |
| ID Code: | 997081 |
| Deposited By: | Rehan Ahmed |
| Deposited On: | 29 Jun 2026 15:16 |
| Last Modified: | 29 Jun 2026 15:16 |
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