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Information Conduit or Agency Cost: Top Management and Director Interlock between Acquirers and Targets


Abstract This paper investigates the role of top management and board interlocks between acquirers and targets. I hypothesize that an interlock may exacerbate agency problems due to conflicting interests and lead to value-decreasing acquisition. An interlock may also serve as a conduit of information and personal experience, and reduce the cost of information gathering for both firms. I find supporting evidence for these two non-mutually exclusive hypotheses. Consistent with the agency hypothesis, interlocked acquirers underperform non-interlocked acquirers by 2% during the announcement period. However, well-governed acquirers receive higher announcement returns and have better post-acquisition performance in interlocked deals. The proportional surp... (more)
Created Date 2012
Contributor Wu, Qingqing (Author) / Bates, Thomas W (Advisor) / Hertzel, Michael (Committee member) / Lindsey, Laura (Committee member) / Arizona State University (Publisher)
Subject Finance / corporate governance / director interlock / information asymmetry / merger and acquisition
Type Doctoral Dissertation
Extent 72 pages
Language English
Copyright
Reuse Permissions All Rights Reserved
Note Ph.D. Business Administration 2012
Collaborating Institutions Graduate College / ASU Library
Additional Formats MODS / OAI Dublin Core / RIS


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Description Dissertation/Thesis