It Takes Two to Tango: Interlockings and Partial Equity Ownership

Maria Rosa Battaggion and Vittoria Cerasi

International Journal of Economics and Finance, 2025, vol. 17, issue 12, 51

Abstract: This paper investigates the role of interlocking directorates as a pre-deal mechanism in minority equity acquisitions between firms competing in the same product market. The potential gain from such transactions depends on the target firm’s private intrinsic value, which the acquiring firm must assess under conditions of adverse selection. As an alternative, the acquirer may propose that one of its executives join the target’s board to facilitate information disclosure. For this arrangement to succeed, however, the target must consent to the proposal. To analyze this mechanism, we develop a novel theoretical framework that identifies the conditions under which interlocking directorates arise and determines the equilibrium terms of the minority equity acquisition. The findings have important antitrust policy implications. An interlocking directorate is not necessarily part of a collusive arrangement, yet it may represent an initial step toward minority equity participation among competing firms in the same market.

Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ccsenet.org/journal/index.php/ijef/article/download/0/0/52593/57289 (application/pdf)
https://ccsenet.org/journal/index.php/ijef/article/view/0/52593 (text/html)

Related works:
Working Paper: It takes two to tango: Interlockings and Partial Equity Ownership (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijefaa:v:17:y:2025:i:12:p:51

Access Statistics for this article

More articles in International Journal of Economics and Finance from Canadian Center of Science and Education Contact information at EDIRC.
Bibliographic data for series maintained by Canadian Center of Science and Education ().