AFFI International Conference 2017

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Do networks of blockholders have an impact on Mergers and Acquisitions?

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The objective of this study is to analyze the impact of corporate network effects on takeover outcomes. The network effect is measured by the strength of a firm’s investment in other firms. We find that firms which have more block investments in other firms have a higher probability of being an acquirer. Acquirers which are more well-connected have a higher probability of completing the deal with the target. Firms which are highly connected by the virtue of being the recipient of block investments, have a higher probability of being a target. In addition, the social connections of the targets help them complete the deal with the acquirer eventually.


Kishore Ravi Narayanan    
SKEMA Business school and Lille 2 University


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