Empirical Research On The Influence Of Board Interlocks On Merger Premium And Tunneling

At present,China is in the period of economic transition.Mergers and acquisitions are becoming more and more common in various industries.As our capital market is still relatively immature compared to foreign countries,the degree of information asymmetry in acquisitions is relatively high,and mergers and acquisitions have a long span of time.The complexity of the process makes failures in mergers and acquisitions uncommon.One of the key factors in mergers and acquisitions---M&A premiums,has an important impact on the success of mergers and acquisitions and M&A performance.At the same time.another phenomenon is also widespread in various industries-board interlocks.As of the end of 2016,More than 90%of listed companies have board interlocks.Existing research suggests that the board interlocks has a positive impact on both parties to the transaction,which is mainly reflected in the promotion of information communication and exchange,and that it is easier for the parties to trust each other,thereby improving transaction efficiency and reducing transaction risks.Based on this,from the perspective of M&A premiums,this paper summarizes the results of the related documents of board,mergers and acquisitions,and uses information asymmetry theory,resource dependence theory,and principal-agent theory to study the merger relationship between the two sides of the board of directors.What kind of role does a board interlock relationship actually provide,a resource for enterprises to bring information advantages?Or a behavior of tunnel for the actual controller and controlling shareholders of listed companies?This article takes a sample of mergers and acquisitions of Chinese A-share listed companies from 2012 to 2017 as a research sample,and systematically studies the influence of board interlocks on the premiums and benefits of mergers and acquisitions.This study finds that:Compared to companies without a director,there is a lower premium for corporate mergers and acquisitions by directors;internal board interlocks have a significant negative effect on the premium of mergers and acquisitions in relation to external directors;the longer the time for board interlocks,the higher the premium for mergers and acquisitions.But the longer-term board interlock does not even have a significant impact on the M&A premium;when the interlocking director has the closest relationship with the listed actual controller or controlling shareholder,it has a significant and positive effect on the M&A premium;When the actual controller or controlling shareholder of the listed company has the closest relationship,the cumulative excess return rate near the M&A announcement date is significantly negative.The interlocking director is the spokesperson for the actual controller or controlling shareholder,and the board interlocks is the method for actual controller or controlling shareholder.