| Since 1990 s,mergers and acquisitions(M&A)have been conducted continually and frequently in a variety of industries around the world.The original intention of M&A is to obtain synergistic effect through the acquisition to create value for the acquirer.In the past 40 years,a large amount of studies have been carried out on the value effect of M&A in the international academic circles,but there is no consistent conclusion.In China,there are great differences in the views of the value effect of M&A too.One view is that M&A can create wealth for shareholders,and can achieve synergistic effect.Another view is that M&A does not create wealth for the acquirer,M&A proceeds are mostly attributable to the shareholders of the target,while the shareholders' earnings of the acquirer may be none or even negative.Whether M&A creates value is becoming an important issue in the M&A research.Around the issue of whether M&A creates value,there exist mainly three research perspectives: the acquirer,the target and the relationship between both.Literatures on the research perspective of the relationship between the acquirer and the target are still relatively rare,compared with the other two research perspectives.And few studies on this issue are from the research perspective of the board interlocks relations between both parties of acquisition.In fact,in the period of economic transition,Chinese institutions are not mature and perfect,so the information transparency is low during the trading process.The costs of acquiring information across businesses are high.The trading cost and trading risk are much higher than in the developed countries which institutions are more mature and perfect.Under the environment of the weakly formal institutions in the transition economy,the informal institutions will play a very important role.As an informal relationship mechanism,some academics believe that board interlocks provide a legal mean for traders on private communication and exchange of information.It helps to ease the friction problems caused by formal institutions' absence.Besides that,board interlocks also can make the two trading parties become familiar and trustful,which can promote the coordination and cooperation between the two parties,and can reduce the risk and uncertainty of the trading process.If the acquisition occurs between the enterprises which have the board interlocks relations,the function of information transfer and organization coordination of board interlocks may reduce the degree of information asymmetry and strengthen coordination and cooperation between the two parties of the acquisition.Then the value creation of M&A can be affected.Given that,this paper attempts to answer the following questions from the perspective of the board interlocks relations between both parties of acquisition based on the information transfer and organization coordination function of the board interlocks.What roles do the board interlocks play to promote the creation of the value of M&A in different stages of M&A? If the positions of interlocking directors are different,will the board interlocks relations influence the value creation of M&A differently? Although the scholars who study inter organizational relationship believe that board interlocks can help to promote information transfer and organizational coordination,but some other studies indicate that many companies failed to adequately cognize and effectively utilize the function of board interlocks.So,in the process of M&A,how to give full play to the function of board interlocks? In addition,in view of the government control of enterprises is a common phenomenon in many countries,especially in economies in transition and emerging market countries,whether the equity nature of the acquirer can influence the relationship between board interlocks and M&A of enterprises?This paper takes domestic M&A events from 2002 to 2015,in which both acquirer and target are A-share listed companies as the research samples,and systematically investigates the effect of the board interlocks relations between both parties of acquisition on the selection of M&A target during the prophase of M&A,on the payment of M&A premium during the metaphase of M&A and on the M&A performance during the anaphase of M&A,and then clears the mechanism of action which board interlocks promote value creation of M&A.This paper also explores the influential factors that can make good use of function of the board interlocks from organizational learning' perspective,and look at the positive role and the conditions of interlocking directors acquisition experience in the process of board interlocks promoting the M&A value creation.In view of state-owned acquirers are susceptible to government intervention during the M&A process,this paper tests the influence of equity nature of the acquirer on the relationship of board interlocks and M&A of enterprises(including selection of the target,M&A premium and M&A performance).The research has got following conclusions:(1)Potential target that has the board interlocks relations with the acquirer is more likely to be the target,that,when this kind of board interlocks relations is formed within the internal directors,the probability of the potential target that has the board interlocks relations with that of the acquirer becoming the target is greater.However,when the kind of board interlocks relations is formed within the external directors,board interlocks have no significant direct impact on the selection of the target.The above results imply that board interlocks relations have important impact on the selection of the target,but the degree of this impact relies on the kind of the board interlocks relations.When the acquirer makes the target selection decisions,the acquirer should also fully consider information superiority and collaborative advantage brought by the board interlocks relations(especially the internal board interlocks relations)between potential target and acquirer besides considering the potential target's financial indicators and other factors.The “relationship mergers” which formed by the board interlocks relations between potential target and acquirer will also have an important impact on the selection of the target.(2)If there are board interlocks relations between both parties of acquisition,M&A premium which the acquirer paid is relatively low,that,when this kind of board interlocks relations is formed within the internal directors,the negative effect of the board interlocks on the M&A premium is greater.However,when the kind of board interlocks relations is formed within the external directors,board interlocks have no significant direct impact on the M&A premium.The above results imply that board interlocks relations have important impact on the M&A premium,but the degree of this impact relies on the kind of the board interlocks relations.When M&A company determine the M&A price,the acquirer should also fully utilize the board interlocks relations(especially the internal board interlocks relations)between both parties of acquisition to assess the value of the target accurately and improve the bargaining power so that to reduce the M&A premium besides considering the influence factors from the enterprise level and market level of the M&A premium.(3)If there are board interlocks relations between both parties of acquisition,the acquirer can get better short-term M&A performance and long-term M&A performance which is measured by accounting performance indicators,and combined entities of acquirer and target can also get better M&A performance,that,when this kind of board interlocks relations is formed within the internal directors,the positive effect of the board interlocks on the M&A performance mentioned above is greater.However,when the kind of board interlocks relations is formed within the external directors,board interlocks have no significant direct impact on the M&A performance mentioned above.The board interlocks relations between both parties of acquisition have no significant direct influence on the long-term M&A performance which is measured by market performance indicators and relative M&A performance of the target.The above results imply that: firstly,the positive influence of board interlocks on M&A value not only can be found by investors at the beginning of declaration of M&A,but also can be reflected through financial indicators in a period of time after M&A.However,due to the noise interference of events other than M&A,board interlocks fail to improve long-term M&A performance which is measured by market performance indicators.Secondly,the board interlocks help create shareholder wealth of both parties of acquisition,so that board interlocks can not only have a positive impact on the M&A performance of the acquirer,but also improve the M&A performance of the combined entity of acquirer and target.But board interlocks do not lead to the decrease of relative M&A performance of the target,and then do not have the difference effect on the M&A performance of the two parties of acquisition.Thirdly,compared with the external board interlocks,the function of information transfer and organization coordination of the internal board interlocks is stronger,so that when the kind of board interlocks relations is formed within the internal directors,the acquirer and the combined entity can get better M&A performance.(4)When the acquirer is non-state-owned company,potential target that has the board interlocks relations with the acquirer is more likely to be the target.When the acquirer is non-state-owned company,the board interlocks relations between both parties of acquisition have t stronger negative effect on M&A premium,and have stronger positive impact on short-term M&A performance and long term M&A performance measured by accounting performance indicators of the acquirer.When the acquirer is non-state-owned company,board interlocks relations between both parties of acquisition have the stronger positive effect on M&A performance of combined entity of acquirer and target.However,the equity nature of the acquirer has no significant direct impact on the relationship between board interlocks and long term M&A performance measured by market performance indicators of the acquirer and relative M&A performance of the target.The above results suggest that,since the government control of the enterprise is a common phenomenon in many countries,especially in economies in transition and emerging market countries,state-owned acquirers are more vulnerable to government intervention during the M&A process,equity nature of the acquirer may affect the relationship between board interlocks and M&A of enterprises(including selection of the target,M&A premium and M&A performance).(5)Acquisition experience of interlocking director can be divided into three types: interlocking director experience with acquisitions in the same industry or product market as the focal acquisition,interlocking director experience with related acquisitions and interlocking director experience with unrelated acquisitions.When the interlocking director has acquisition experience in a specific industry or product market,and the acquirer also select the target in the same industry or product market,interlocking director experience with acquisitions in the same product market as the focal acquisition can strengthen the effect of board interlocks on the selection of the target,M&A premium and M&A performance of the acquirer and combined entity of acquirer and target.In related acquisitions,interlocking director experience with related acquisitions can strengthen the effect of board interlocks on the selection of the target,M&A premium and M&A performance of the acquirer and combined entity of acquirer and target.In unrelated acquisitions,interlocking director experience with unrelated acquisitions can strengthen the effect of board interlocks on selection of the target,M&A premium and M&A performance of the acquirer and combined entity of acquirer and target.In the process of M&A,if the acquirer fail to adequately cognize and effectively utilize the information superiority and collaborative advantage brought about by board interlocks,the function of the board interlocks will not be effectively carried out.The above results suggest that,when the prerequisite which previous M&A of interlocking company is similar to the current M&A of the acquirer meets,acquisitions experience of interlocking director can help the acquirer adequately cognize and effectively utilize the information transfer and organizational coordination functions of board interlocks,improve the rationality of M&A decision and the effectiveness of M&A implementation,and promote the value creation of M&A.Based on previous studies,this paper makes a systematic study on the effect of the board interlocks on the M&A of enterprises.Possible innovations of the paper include the following several aspects:(1)Through investigates the effect of the board interlocks on selection of the target,M&A premium and M&A performance systematically,this paper figures out the mechanism of action which board interlocks promote value creation of M&A.This study uses asymmetric information theory and resource dependency theory to systematically investigate the effect of the board interlocks on selection of the target,M&A premium and M&A performance comprehensively,and finds the board interlocks strengthen the communication and coordination of both parties of acquisition.It helps the acquirer to make proper selection of the target and reduce the M&A trading cost during the prophase of M&A.This promotes the reasonable M&A price and avoid the over payment of M&A premium during the metaphase of M&A,and then to improve the M&A performance of the acquirer and combined entity of acquirer and target during the anaphase of M&A.Board interlocks promoting the creation of the M&A value finally.On this basis,this paper divides board interlocks into internal board interlocks and external board interlocks,which finds though board interlocks have positive impact on the M&A value creation,the degree of this impact relies on the kind of the board interlocks.Internal board interlocks can play a more important role on the both information transmission and organization coordination.The above findings effectively reveal the reaction "black box" of the relationship between the board interlocks and the value creation of M&A,and clear the mechanism of action of board interlocks promoting value creation of M&A,which is a useful supplement to the series research.(2)This paper also explores the influential factors that can make good use of function of the board interlocks from the organizational learning's perspective.Although the scholars who study inter organizational relationship believe that the board interlocks helps to promote the effective transmission of information and strengthen the coordination and cooperation between the two parties.However,some studies have pointed out that many companies failed to adequately cognize and effectively utilize the information transfer and organizational coordination functions of the board interlocks.Rare people think deeply how to help enterprises to adequately cognize and effectively utilize the two functions of the board interlocks.This paper explores the influencing factors of promoting the function of board interlocks to play effectively,from the organizational learning's perspective,and finds out when the prerequisite which previous M&A of interlocking company is similar to the current M&A of the acquirer meets,acquisitions experience which interlocking director got from interlocking company can help the acquirer adequately cognize and effectively utilize the information superiority and collaborative advantage brought by the board interlocks,and promote to make good use of function of the board interlocks in the process of M&A decision and the M&A implementation.The above conclusions explore the research on this field from the organizational learning's perspective in depth.(3)This paper appraises value effect of M&A from multiple dimensions.Most domestic researches focused on the effect of M&A on the value of acquirer or target.Rare studies investigated the M&A value effect of combined entity of acquirer and target,and the relative M&A value effect of the target compared with the acquirer.This paper appraises value effect of M&A from multiple dimensions.In addition to appraise the influence of board interlocks on the value effect of M&A of the acquirer,through measuring overall net economic income of combined entity of acquirer and target,and the relative net economic income of the target compared with the acquirer,this paper examines the influence of board interlocks on the M&A value of combined entity of acquirer and target,and the relative M&A value of the target compared with the acquirer.This paper expands current domestic research perspective of the value effect of M&A. |
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