Does social network connectedness affect acquirer merger performance around the world?

We examine the effects of bilateral social connections and acquirer CEO network centrality on merger performance using a sample of M&A deals from 30 countries. Our results indicate that board overlaps between acquirers and targets are associated with higher abnormal acquisition returns for bidder shareholders, although the average effect in our full sample is lower than that documented for U.S. bidders. In addition, we document a positive relationship between bidder CEO centrality and acquisition gains—a finding that contrasts with previous research on U.S. firms and may be explained by generally lower CEO centrality in non-U.S. firms, which limits the potential for network-based entrenchment. We further show that the benefits of both bilateral ties and overall CEO connectedness are less pronounced in countries with weak auditing and accounting reporting standards and/or inefficient takeover markets. Ultimately, our findings suggest that efficient formal institutions are crucial for fully realizing the benefits of informal interpersonal social networks in M&A outcomes.