Acquirer performance when founders remain in the firm

• I examine the value effects of founders in acquisitions.
• Founders who remain increase acquirers' performance post-merger.
• The period that founders remain affects acquirers' performance.
• Founders are more valuable as executives than as directors.
• My findings are robust to endogeneity controls.

This study explores the impact of founders on acquirers' merger performance. The results show that the acquisition of founding firms has a relatively negative impact on acquirers' performance, whereas founders who remain in a firm post-merger have a relatively positive influence. Moreover, I find significant differences between the acquirers of firms where founders remain and the acquirers of firms where founders leave. The acquirers of firms in which founders remain exhibit a higher Tobin's q and greater cumulative abnormal returns. This phenomenon is more prominent when founders remain as daily executives than when founders remain as non-daily directors. Additionally, the length of time that the founders remain with the merged firm affects the findings. Finally, I document a robust positive relationship between the remaining founders and acquirers' value or stock returns, indicating the value of founders to acquirers.