Non-controlling shareholders’ network and the reliability of merger and acquisition performance commitments: Governance or collusion?

Shaozheng Fu and Jinkun Yang

Finance Research Letters, 2025, vol. 71, issue C

Abstract: This study examines the effect of non-controlling shareholders’ network on the reliability of performance commitment (PC) agreements signed during merger and acquisitions (M&A), based on A-share listed companies in China during 2008–2022. Findings indicate that higher non-controlling shareholders’ network centrality is significantly associated with an increased PC reliability. Mechanism tests reveal that this correlation is driven by the network's embedded advantage to reduce M&A premiums and curb insider shareholding reduction. Furthermore, this study highlights that the networks of pressure-resistant institutional investors, non–state-owned legal entity shareholders, and individual investors play crucial roles in enchaining PC reliability.

Keywords: Performance commitments; Non-controlling shareholders; Network centrality; Corporate governance; Merger and acquisition (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014600

DOI: 10.1016/j.frl.2024.106431

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