The objective of this paper is to examine the relationships between the governance structure of a firm and its choice of corporate strategy. Using a sample of 102 corporate takeovers, it finds that the probability of engaging in a diversification program decreases when the board of directors is dominated by outsiders, but it increases when the CEO is also the chairperson of the board. In addition, it finds that the gains to the shareholders of the acquiring firm are smaller when the CEO is also the chairperson of the board.
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