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.