Trust and corporate governance in interfirm negotiations

Heather R. Parola, Kimberly M. Ellis, Lee C. Jarvis and Toufiq Nazrul

Journal of Business Research, 2025, vol. 194, issue C

Abstract: We examine the role of trust in acquisition negotiations. Specifically, we investigate the impact of acquirer trust in their target firm on a major negotiation outcome, the acquisition premium, in the context of 113 acquisitions. Further, we consider the effects of the board of directors in both their monitoring and advising roles during negotiations. We find that acquiring firms pay higher premiums for trustworthy targets, but that the board of directors in its monitoring role negatively minimizes the trust and premium relationship while the board of directors in its advising role decreases the premium directly.

Keywords: Acquisition Negotiation; Acquisition Premium; Trust; Board of Directors (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:194:y:2025:i:c:s014829632500222x

DOI: 10.1016/j.jbusres.2025.115399

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