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Directors with supply chain experience as heterogeneous network pipes: how does it affect M&A efficiency

Xudong Pei (Xi'an Shiyou University, Xi'an, China)
Juan Song (Xi'an Shiyou University, Xi'an, China)

Asia-Pacific Journal of Business Administration

ISSN: 1757-4323

Article publication date: 30 April 2024

38

Abstract

Purpose

The link between interlocking directors and mergers and acquisitions (M&A) efficiency has been analyzed in an information asymmetry environment. Despite an abundance of evidence highlighting that interlocking directors do contribute to M&A efficiency in an acquirer-target binary relationship, the target is embedded in a complex network of supplier-customer relationships, which implies that the acquirer needs to consider the value of suppliers, distributors and retailers in the target’s supply chain in improving M&A efficiency. Through the lenses of acquirer-target multivariate relationships, this paper aims to examine how directors with supply chain experience (DSCs) act as heterogeneous network pipes to affect M&A efficiency.

Design/methodology/approach

Using a sample of 311 A-share listed firms on the Shanghai and Shenzhen stock exchanges in China during 2011–2020, this paper investigates the relationship between DSCs and M&A efficiency by using ordinary least squares (OLS) regression.

Findings

Through empirical research, we verify a negative relationship between DSCs and M&A duration and an inverted U-shaped relationship between both DSCs and M&A performance, revealing the complexity of the relationship between experience and efficiency. Furthermore, drawing on upper echelon theory, the information value of DSCs will be greatly reduced when executives have overconfident psychological characteristics, which are mainly shown to negatively moderate the relationship between DSCs and M&A performance. We also conduct multiple robustness tests and supplemental analyses to illustrate the robustness and boundaries of our findings. Finally, DSCs are likely more important in environments among growth and mature firms as well as high-growth industries.

Originality/value

We break through the assumption that interlocking directors contribute to M&A efficiency in an acquirer-target binary relationship and examine the impact of DSCs on M&A efficiency based on micro-empirical evidence from the value of target-related upstream or downstream industries, which extends the connotation of interlocking directors and enriches the study related to factors influencing M&A efficiency.

Keywords

Acknowledgements

This research was funded by National Social Science Foundation of China (No.16BGL042); Soft Science Research Program of Shaanxi Province (No.2023-CXRKX-094); Shaanxi Provincial Department of Education Special Scientific Research Programme Project (No.2023JK0182).

Citation

Pei, X. and Song, J. (2024), "Directors with supply chain experience as heterogeneous network pipes: how does it affect M&A efficiency", Asia-Pacific Journal of Business Administration, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/APJBA-03-2023-0136

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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