Interlocking Directorates And Target Selection In Merger And Acquisition

In recent years, mergers and acquisitions have become an important way of business integration and capital operation in our country. M & A transactions are becoming more and more frequent, and the scale of M & A is increasing year by year. On the other hand, listed companies in our country is experiencing from the original shareholders centrism to the board of directors centralism changing stage. The board of directors and their social relations in corporate investment and financing decision-making process plays an more and more important role. interlocking directorates, as a bridge between enterprises, mastering the first-hand resources, may have an impact on the operating of board of directors.Therefore, this paper attempts to study whether the existence of interlocking directorates will make it easier for the company they work for to become the target of mergers and acquisitions. At the same time, when carrying out transverse mergers, vertical mergers and mixed mergers, acquiring companies may have different strategic motivation. So the interlocking directorates may play different roles in the choosing of merger target. The innovation of this paper is to make a distinction between the three different acquisition modes when studying the relationship between interlocking directorates and merger target choosing. In addition, linking the acquiring company and the acquired company through the bridge of interlocking directorates contains the contact point of view, which is different from the previous atomic research methods.This paper chooses M & A events from 2004 to 2014 between China A-share listed companies as a sample, and then pair potential acquisition targets to each real acquired company according to a certain standard to construct the full sample. All the samples are divided into three sub samples according to the three modes of M & A and then combined with each other. This paper use probit regression models to verify the hypotheses. The empirical results show that:1, the interlocking directorates will affect the acquisition target choosing of corporate mergers and acquisitions. Under the same conditions, the acquiring company is more likely to choose the company of linkage relationship on board of directors as the acquisition target; 2, the effect of interlocking directorates on target choosing of M & A under mixed mergers is greater than which under horizontal mergers, while less than which under vertical mergers.