Board connections and M&A transactions

Abstract

YE CAI: Board Connections and M&A Transactions (Under the direction of Merih Sevilir and Anil Shivdasani) We examine M&A transactions between firms with current board connections and show that acquirers obtain significantly higher announcement returns in such transactions. Acquirer announcement returns in transactions with a first-degree board connection where the acquirer and the target share a common director are 2.46% greater than those in nonconnected transactions. Similarly, acquirer announcement returns in transactions with a second-degree board connection where one director from the acquirer and one director from the target serve on the board of a third firm are 1.62% greater than those in non-connected transactions. Our results suggest that first-degree board connections benefit acquirers by allowing them to acquire the target at a lower takeover premium. Second-degree board connections, on the other hand, benefit acquirers by resulting in greater value creation from the deal, as evidenced by greater combined acquirer and target announcement returns and better post-merger operating performance in such deals. v

Corporate Social Responsibility and the Long-Term Performance of Mergers and Acquisitions: Do Regions and Related-Party Transactions Matter?

“…Our findings support studies which found the "Efficiency Enhancing" effect [11][12][13], as well as studies suggesting the contingency perspective on related-party transactions [55]. We also further explore the contingent influence of related-party transactions on CSR-performance linkage.…”

“…Our findings are contradicted by some studies, which concluded CSR leads to a "Resource Hollowing" effect [9,[51][52][53][54]. However, our findings are consistent with studies which concluded CSR brings about an "Efficiency Enhancing" effect [11][12][13]. Our findings also support studies that suggest the contingency perspective on related-party transactions [55].…”

“…Related-party transactions could also bring about "Efficiency Enhancing" effects [11,13] as follows: (1) Such transactions could reduce search costs and exorbitant prices when firms acquire factors from imperfect markets (especially in emerging markets). (2) Related-party transactions can reduce the extent of information asymmetry and facilitate communication, and then enhance contract implementation.…”

“…Previous studies have indicated that the buyer's size, deal size, leverage ratio, and level of state ownership all have effects on M&A performance [3,13,[62][63][64]. Following the study of Wang and Kan (2014) [63], and Xu et al (2016) [64], we controlled factors that might influence M&A performance.…”

Interlocking Board and the Selection of the Target Company: A Study from the Perspective Based on the Resource Dependence Theory

“…Because target companies know more about their own value than merging companies, information asymmetry on target company value arises. Adverse selection caused by information asymmetry of both parties of M&A (hereinafter referred to as both parties) information, will not only influence M&A efficiency for offer [5], but also reduce M&A performance for increase of M&A cost [6,7]; when information asymmetry is serious, these M&A and transaction plans that will success may fail thereby [2].…”