Does deal size moderate the effects of board faultlines? Evidence from acquisitions

What is it about?

Board faultlines, which reflect intrinsic divisions of board members into relatively homogeneous subgroups, are associated with poor firm performance. We extend existing board faultline research by examining how acquisition deal size moderates the negative implications of board faultlines. we find that strong faultlines are associated with poorer acquisition outcomes in the long term, but not in the short term. Further, we find that the effect of faultline strength on long-term acquisition outcomes is weaker for larger acquisition deals than smaller acquisition deals. Our findings are consistent with deal size moderating the relation between faultlines and acquisition outcomes.

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