Director networks and takeovers

Luc Renneboog and Yang Zhao

Journal of Corporate Finance, 2014, vol. 28, issue C, 218-234

Abstract: We study the impact of corporate networks on the takeover process. We find that better connected companies are more active bidders. When a bidder and a target have one or more directors in common, the probability that the takeover transaction will be successfully completed augments, and the duration of the negotiations is shorter. Connected targets more frequently accept offers that involve equity. Directors of the target firm (who are not interlocked) have a better chance to be invited to the board of the combined firm in connected M&As. While connections have a clear impact on the takeover strategy and process, we do not find evidence that the market acknowledges connections between bidders and targets as the announcement returns are not statistically different from those bidders and targets which are ex ante not connected.

Keywords: Mergers and acquisitions; Director networks; Centrality; Connections (search for similar items in EconPapers)
JEL-codes: D85 G14 G34 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (64)

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Working Paper: Director Networks and Takeovers (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:28:y:2014:i:c:p:218-234

DOI: 10.1016/j.jcorpfin.2013.11.012

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