Nawfal, Wissam (2011) Interlocking Directors: Impact on Canadian Merger and Acquisition Outcomes. Masters thesis, Concordia University.
Preview |
Text (application/pdf)
2MBNawfal_MSc_S2011.pdf - Accepted Version |
Abstract
This paper examines the effect(s) of interlocking boards on the outcomes of merger and acquisition transactions in Canada. Among the most significant results of this paper is evidence indicating that merger deals with an interlocking relationship, i.e. having one or more shared directors between the transacting firms, results in higher cumulative abnormal returns the target and acquiring firms. Merging firms with interlocking directorates were found to be more successful during the merger process, have a higher likelihood of transacting with cash, and have a significantly higher frequency of toeholds as well as higher toehold percentage ownership. This paper also presents a brief snapshot of the Canadian market for corporate control by documenting various firm and board characteristics, such as firm size, the fraction of inside, outside, grey and female directors serving on the average sample firm, as well as the average tenure of directors, and the average amount of share ownership held by directors, as well as how these characteristics influence the likelihood of interlocks between firms. A higher than average number of women and grey directors were found to have significantly positive effect on the propensity of interlocks, whereas, surprisingly, larger firm size had the reverse effect.
| Divisions: | Concordia University > John Molson School of Business > Finance |
|---|---|
| Item Type: | Thesis (Masters) |
| Authors: | Nawfal, Wissam |
| Institution: | Concordia University |
| Degree Name: | M. Sc. |
| Program: | Administration (Finance option) |
| Date: | 15 April 2011 |
| Thesis Supervisor(s): | Betton, Sandra |
| Keywords: | interlock interlocking directors boards canada |
| ID Code: | 7348 |
| Deposited By: | WISSAM NAWFAL |
| Deposited On: | 13 Jun 2011 13:08 |
| Last Modified: | 17 Aug 2022 16:39 |
References:
Bradley, M., Desai, A., and Kim, E.H., 1988, “Synergistic Gains from Corporate Acquisitions and their Division between the Stockholders of Target and Acquiring Firms,” Journal of Financial Economics, 21, 3-40Betton, S., E. Eckbo, and K. S. Thorburn, 2007, “Merger Negotiations and the Toehold Puzzle,” Journal of Financial Economics, forthcoming
Betton, S., W. Nawfal, I. Paeglis 2007 “Overlapping Boards of Directors: Evidence from Canadian Mergers and Acquisitions” presented at the Administrative Sciences Association of Canada (ASAC) conference, Ottawa, Canada, June 2007
Brown, S., and J. Warner 1985, “Using daily stock returns: The Case of Event Studies”, Journal of Financial Economics 14: 3-31.
Bulow. J., M. Huang, and P. Klemperer, 1999, “Toeholds and Takeovers,” Journal of Political Economy, 107, 427-454
Burkart, M., 1995 “Overbidding In Takeover Contests,” Journal of Finance, 50, 1491-1515
Catalyst “2007 Catalyst Census of Women Board Directors of the FP500: Voices From the Boardroom” http://www.catalyst.org/file/141/census%202007-%20canada.pdf
Chowdry, B., and N.Jegadeesh, 1994, “Pre-Tender Offer Share Acquisition Strategy in Takeovers,” Journal of Financial and Quantitative Analysis, 29, 117-129
Clayton Act Prohibition of Interlocking Directorates in Industrial or Commercial Corporations Columbia Law Review, Vol. 54, No. 1. (Jan., 1954), pp. 130-132.
Dooley, P. C. 1969 “The Interlocking Directorate” The American Economic Review, Vol. 59, No. 3. (Jun., 1969), pp. 314-323.
Dunn, P. 2010 “Breaking the Boardroom Gender Barrier: The Human Capital of Female Corporate Directors” Journal of Management and Governance 2010-11-23, Issn: 1385-3457
Fama, E., 1980 "Banking in the Theory of Finance,” Journal of Monetary Economics, 1980, 6(1), pp. 39-57.
Fama, E., M., Jensen 1980 "Agency Problems and Residual Claims,” Journal of Law and Economics, 1983, 26(2), pp. 327-49.
Haunschild, P., and R., Beckman, C. M. 1998 “When Do Interlocks Matter?: Alternate Sources of Information and Interlock Influence,” Administrative Science Quarterly, Vol. 43, No. 4. (Dec., 1998), pp. 815-844.
Hillman, A. J., Shropshire, C., & Cannella, A. A. 2007. “Organizational Predictors of Women on Corporate Boards”. Academy of Management Journal, 50(4), 941–952.
Hirshleifer, D., Titman, S., 1990. Share Tendering Strategies and the Success Of Hostile Takeover Bids. Journal of Political Economy 98, 295–324.
Jensen, M., W., Meckling 1976 “Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure”, Journal of Financial Economics, October, 1976, V. 3, No. 4, pp. 305-360.
Katz, M, 2008 “Canadian Merger Law and Interlocking Directorships/ Minority Shareholdings”, Davies Ward Phillips & Vineberg LLP, North American Free Trade & Investment Report
Koenig, T. and R. Gogel, 1981, “Interlocking Directorates as a Social Network”, American Journal of Economics and Sociology, 40, 37-50.
Nicholls, C., 2006, “The Characteristics of Canada’s Capital Markets and the Illustrative Case of Canada’s Legislative Regulatory Response to Sarbanes-Oxley,” Commissioned by the Task Force to Modernize Securities Legislation in Canada
Mintz, B. and Schwartz, M., “Interlocking Directorates and Interest Group Formation,” American Sociological Review, Vol. 46, No. 6. (Dec., 1981), pp. 851-869.
O'Hagan, S. B. and Green, M. B. 2002, “Tacit knowledge transfer via interlocking directorates: A comparison of Canada and the United States,” Geografiska Annaler: Series B, Human Geography, 84: 49–63.
Palmer, D. 1983, “Broken Ties: Interlocking Directorates and Intercorporate Coordination” Administrative Science Quarterly, Vol. 28, No. 1. (Mar., 1983), pp. 40-55.
Shleifer, A., Vishny, R.W., 1986. Large Shareholders and Corporate Control. Journal of Political Economy 94, 461–488.
Simpson, E. H., 1951, “The Interpretation of Interaction in Contingency Tables,” Journal of the Royal Statistical Society, Vol. 13, No. 2. (1951), 238.
Sing, R., 1998, “Takeover Bidding with Toeholds: The Case of the Owner’s Curse.” Review of Financial Studies, 11, 679-704
Repository Staff Only: item control page
Download Statistics
Download Statistics