Two Essays on Finance: Co-Opted Directors and Mergers and Acquisitions and the Impact of Biodiversity Risk on the Cost of Bank Loans

Author

• Fariba Gholami, The University of Texas Rio Grande Valley

Date of Award

5-1-2026

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Finance

First Advisor

Ahmed Elnahas

Second Advisor

Siamak Javadi

Third Advisor

Monika Rabarison

Abstract

This dissertation comprises of two papers. In the first paper, co-opted board members, those appointed after the CEO assumes office, are poor monitors and, contrary to prior assumptions, ineffective advisors. I show that board co-option is associated with suboptimal merger and acquisition (M&A) decisions, adverse deal characteristics, and lower acquirer’s short- and long term returns and operating performance. These results are robust to the use of propensity score matching, entropy balancing, Instrumental variable using 2SLS, and difference-in-differences to address selection bias and endogeneity. Cross-sectional evidence indicates that the negative effects of board co-option are more pronounced when boards are less busy and when directors possess less firm- or industry-specific experience than the CEO. Overall, the findings suggest that co-opted boards impair M&A decision-making through a combination of weakened monitoring and reduced advice utilization. JEL codes: G30; G34 Keywords: Board co-option, Mergers and Acquisitions, Board of directors. In the second paper, I find robust empirical evidence that firms with higher exposure to biodiversity risk pay significantly higher spreads on their bank loans. This result is robust to different model specifications, several measures of biodiversity risk, and survives a battery of tests to ease various endogeneity concerns. In particular, I find that firms that have no exposure to biodiversity risk still pay higher spreads on their loans when their customers are exposed to this risk, hinting on the systemic nature of this risk. I further show that the adverse of biodiversity risk is driven by poorly vii rated borrowers and long-term loans. Overall, the evidence suggests that lenders consider biodiversity risk as a relevant risk factor.

Comments

Copyright 2026 Fariba Gholami. All Rights Reserved. https://proquest.com/docview/3371138178

Recommended Citation

Gholami, F. (2026). Two Essays on Finance: Co-Opted Directors and Mergers and Acquisitions and the Impact of Biodiversity Risk on the Cost of Bank Loans [Doctoral dissertation, The University of Texas Rio Grande Valley]. ScholarWorks @ UTRGV. https://scholarworks.utrgv.edu/etd/1941