Associate Professor of Business Administration, Marvin Bower Fellow
Yuhai Xuan is an Associate Professor in the Finance Unit and Marvin Bower Fellow at Harvard Business School, and an Associate Editor of the Journal of Financial and Quantitative Analysis. He currently teaches Corporate Financial Management in the second year of the MBA program and Finance for Senior Executives in the Executive Education program. He has previously taught the required finance course in the first-year MBA program.
Professor Xuan's research focuses on empirical corporate finance, corporate governance, and behavioral finance. His work has been published in the Journal of Financial Economics, the Review of Financial Studies, and the Journal of Accounting Research, and has been covered in media outlets such as The Economist, the Financial Times, and Bloomberg. He has been awarded the 2011 Jensen Prize (First Place Winner) for the best corporate finance paper published in the Journal of Financial Economics.
Professor Xuan holds an A.M. and a Ph.D. in Business Economics from Harvard University. His employers prior to graduate school include HSBC and Microsoft Corporation.
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Acquirer-Target Social Ties and Merger Outcomes
This paper investigates the effect of social ties between acquirers and targets on merger performance. We find that the extent of cross-firm social connection between directors and senior executives at the acquiring and the target firms has a significantly negative effect on the abnormal returns to the acquirer and to the combined entity upon merger announcement. Moreover, acquirer-target social ties significantly increase the likelihood that the target firm’s chief executive officer (CEO) and a larger fraction of the target firm’s pre-acquisition board of directors remain on the board of the combined firm after the merger. In addition, we find that acquirer CEOs are more likely to receive bonuses and are more richly compensated for completing mergers with targets that are highly connected to the acquiring firms, that acquisitions are more likely to take place between two firms that are well connected to each other through social ties, and that such acquisitions are more likely to subsequently be divested for performance-related reasons. Taken together, our results suggest that social ties between the acquirer and the target lead to poorer decision making and lower value creation for shareholders overall.