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Trust and corporate governance in interfirm negotiations

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  • Parola, Heather R.
  • Ellis, Kimberly M.
  • Jarvis, Lee C.
  • Nazrul, Toufiq

Abstract

We examine the role of trust in acquisition negotiations. Specifically, we investigate the impact of acquirer trust in their target firm on a major negotiation outcome, the acquisition premium, in the context of 113 acquisitions. Further, we consider the effects of the board of directors in both their monitoring and advising roles during negotiations. We find that acquiring firms pay higher premiums for trustworthy targets, but that the board of directors in its monitoring role negatively minimizes the trust and premium relationship while the board of directors in its advising role decreases the premium directly.

Suggested Citation

  • Parola, Heather R. & Ellis, Kimberly M. & Jarvis, Lee C. & Nazrul, Toufiq, 2025. "Trust and corporate governance in interfirm negotiations," Journal of Business Research, Elsevier, vol. 194(C).
    • Handle: RePEc:eee:jbrese:v:194:y:2025:i:c:s014829632500222x
    DOI: 10.1016/j.jbusres.2025.115399
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