Role of potential power: The effect of part-time board secretary on merger decisions

Abstract

Based on the data of Chinese A-share listed companies from 2009 to 2018, this study employs panel data regression model and instrumental variables approach to investigate the impact of part-time board secretaries who also hold positions as other senior executives on merger decisions and performance. We find that compared with companies with full-time board secretaries, listed companies with senior executives concurrently serving as board secretaries are more likely to initiate mergers, initiate more mergers, while the positive effect on long-term merger performance is limited to only one year after the merger. Moreover, the impact of part-time board secretaries on merger decisions or performance is more significantly when the deputy general manager concurrently serves as the board secretary, while there is almost no significant impact when the board director or CFO is the board secretary. Finally, this study further explores the mechanisms by which part-time board secretaries influence their merger decisions from a relative remuneration perspective, confirming that the power behind the executives is an important factor driving merger transaction.