The effect of interlocking directorates on mergers and acquisitions in Brazil

Thiago Sousa Barros (), Julián Cárdenas () and Wesley Mendes-Da-Silva ()
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Thiago Sousa Barros: Universidade Federal de Ouro Preto
Julián Cárdenas: Universitat de València
Wesley Mendes-Da-Silva: Sao Paulo School of Business Administration of Fundação Getulio Vargas

Journal of Management & Governance, 2021, vol. 25, issue 3, No 7, 839 pages

Abstract: Abstract This study investigates the effect of interlocking directorates on national and international mergers and acquisitions (M&A) in Brazil. Based on a sample of 153 large Brazilian firms in a time series (2000–2015), and using network techniques and regression analysis, this study addresses the hypothesis: board interlocking reduces the asymmetry of information in M&A, leading companies with a greater number of ties (degree centrality) to be more likely to participate in M&A. The results show that firms that have a larger number of ties with other firms through board interlocks (higher degree centrality) are more likely to perform M&A. Other network measures (closeness, eigenvector, betweenness, and structural holes) have no significant impact on the likelihood to participate in M&A. This study examines the impact of board interlocking on firms’ propensity to undertake M&A while controlling for financial, corporate governance, and country-level governance variables in the explanatory model. This paper also contributes by identifying the determinants of M&A performed by companies headquartered in emerging countries such as Brazil, a major participant in M&A processes at the international level.

Keywords: Interlocking directorates; Mergers and acquisitions; Country-level governance; Brazil; International level; Regression analysis (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s10997-020-09529-7

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