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The effect of interlocking directorates on mergers and acquisitions in Brazil

Author

Listed:
  • 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)

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.

Suggested Citation

  • Thiago Sousa Barros & Julián Cárdenas & Wesley Mendes-Da-Silva, 2021. "The effect of interlocking directorates on mergers and acquisitions in Brazil," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(3), pages 811-839, September.
  • Handle: RePEc:kap:jmgtgv:v:25:y:2021:i:3:d:10.1007_s10997-020-09529-7
    DOI: 10.1007/s10997-020-09529-7
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