IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v11y2019i24p6955-d294833.html
   My bibliography  Save this article

Influence of Interlocking Directorates on Integration after the Acquisition of Warsaw Stock Exchange—Listed Companies

Author

Listed:
  • Anna Stankiewicz-Mróz

    (Department of Management Systems and Innovation, Lodz University of Technology, Piotrkowska 266, 90-924 Łódź, Poland)

Abstract

Acquisition processes are aimed at achieving value based on synergistic effects. One of the most important obstacles in achieving value is the manner of conducting post-transaction integration—a risk area often ignored. This study assumes that a factor that may be important for the course of integration after the acquisition of enterprises may be the fact of personal connections through interlocking directorates between transaction partners of acquisitions. The research was carried out in two stages. The first was to identify the scope of connections by interlocking between WSE-listed companies participating in acquisition transactions. This stage was implemented using the social network analysis method (SNA) and covered 188 companies. In the second stage, research was conducted using semi-structured interview techniques with the CEOs of the acquiring companies. The aim of the study was to identify the relationship between personal relations and the course of post-transaction integration. The analysis focused primarily on two factors: the dynamics of integration activities and their centralization. The research covered 38 companies that were included in the sample in the first stage of the research (including 19 personally related companies and, for comparison, in 19 unrelated companies). Studies have shown that the fact of connecting through interlocking affects the post-transaction integration model in the analyzed group. The dynamically centralized model dominates in enterprises related by particular persons. Many integration activities are carried out in the first 100 days. The factor affecting the implemented integration model is the durability of connections between participants before and after the transaction is conducted and the position in the network of connections determined by such sociometric measures as the centrality of proximity and own vector. Enterprises connected with long-term relationships usually demonstrate high dynamics of integration activities, which are conducted by joint teams whose group employees represent each of the merging enterprises. In addition, the CEOs surveyed from this group of companies declare having an integration plan with different levels of detail in each case.

Suggested Citation

  • Anna Stankiewicz-Mróz, 2019. "Influence of Interlocking Directorates on Integration after the Acquisition of Warsaw Stock Exchange—Listed Companies," Sustainability, MDPI, vol. 11(24), pages 1-22, December.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:24:p:6955-:d:294833
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/11/24/6955/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/11/24/6955/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mitchell, Mark L & Stafford, Erik, 2000. "Managerial Decisions and Long-Term Stock Price Performance," The Journal of Business, University of Chicago Press, vol. 73(3), pages 287-329, July.
    2. Tuugi Chuluun & Andrew Prevost & John Puthenpurackal, 2014. "Board Ties and the Cost of Corporate Debt," Financial Management, Financial Management Association International, vol. 43(3), pages 533-568, September.
    3. Eero Vaara, 1999. "Cultural differences and post-merger problems : Misconceptions and cognitive simplifications," Post-Print hal-02312874, HAL.
    4. Roberto A. Weber & Colin F. Camerer, 2003. "Cultural Conflict and Merger Failure: An Experimental Approach," Management Science, INFORMS, vol. 49(4), pages 400-415, April.
    5. Florian Bauer & Daniel Degischer & Kurt Matzler, 2013. "Is Speed of Integration inM&A Learnable? TheModerating Role of Organizational Learning on the Path of Speed of Integration on Performance," Active Citizenship by Knowledge Management & Innovation: Proceedings of the Management, Knowledge and Learning International Conference 2013,, ToKnowPress.
    6. Gregory G. Dess & Richard B. Robinson, 1984. "Measuring organizational performance in the absence of objective measures: The case of the privately‐held firm and conglomerate business unit," Strategic Management Journal, Wiley Blackwell, vol. 5(3), pages 265-273, July.
    7. Miozzo, Marcela & Walsh, Vivien, 2006. "International Competitiveness and Technological Change," OUP Catalogue, Oxford University Press, number 9780199259243.
    8. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    9. Richard J. Rosen, 2006. "Merger Momentum and Investor Sentiment: The Stock Market Reaction to Merger Announcements," The Journal of Business, University of Chicago Press, vol. 79(2), pages 987-1017, March.
    10. Svensson, Göran & Wood, Greg & Callaghan, Michael, 2010. "A corporate model of sustainable business practices: An ethical perspective," Journal of World Business, Elsevier, vol. 45(4), pages 336-345, October.
    11. Taco H. Reus & Bruce T. Lamont & Kimberly M. Ellis, 2016. "A darker side of knowledge transfer following international acquisitions," Strategic Management Journal, Wiley Blackwell, vol. 37(5), pages 932-944, May.
    12. Hema A. Krishnan & Alex Miller & William Q. Judge, 1997. "Diversification and top management team complementarity: is performance improved by merging similar or dissimilar teams?," Strategic Management Journal, Wiley Blackwell, vol. 18(5), pages 361-374, May.
    13. Deepak K. Datta, 1991. "Organizational fit and acquisition performance: Effects of post‐acquisition integration," Strategic Management Journal, Wiley Blackwell, vol. 12(4), pages 281-297, May.
    14. Angwin, Duncan, 2004. "Speed in M&A Integration:: The First 100 Days," European Management Journal, Elsevier, vol. 22(4), pages 418-430, August.
    15. Jeffrey S. Harrison & Douglas A. Bosse & Robert A. Phillips, 2010. "Managing for stakeholders, stakeholder utility functions, and competitive advantage," Strategic Management Journal, Wiley Blackwell, vol. 31(1), pages 58-74, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Strobl, Andreas & Bauer, Florian & Matzler, Kurt, 2020. "The impact of industry-wide and target market environmental hostility on entrepreneurial leadership in mergers and acquisitions," Journal of World Business, Elsevier, vol. 55(2).
    2. Albert Banal‐Estañol & Jo Seldeslachts, 2011. "Merger Failures," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(2), pages 589-624, June.
    3. Demirtas, Gul & Simsir, Serif Aziz, 2016. "The effect of CEO departure on target firms’ post-takeover performance: Evidence from not-delisting target firms," Finance Research Letters, Elsevier, vol. 16(C), pages 55-65.
    4. Fischer, Mario, 2017. "The source of financing in mergers and acquisitions," The Quarterly Review of Economics and Finance, Elsevier, vol. 65(C), pages 227-239.
    5. Andrey Golubov & Dimitris Petmezas & Nickolaos G. Travlos, 2013. "Empirical mergers and acquisitions research: a review of methods, evidence and managerial implications," Chapters, in: Adrian R. Bell & Chris Brooks & Marcel Prokopczuk (ed.), Handbook of Research Methods and Applications in Empirical Finance, chapter 12, pages 287-313, Edward Elgar Publishing.
    6. David R. King & Gang Wang & Mehdi Samimi & Andres Felipe Cortes, 2021. "A Meta‐Analytic Integration of Acquisition Performance Prediction," Journal of Management Studies, Wiley Blackwell, vol. 58(5), pages 1198-1236, July.
    7. Ulrike Malmendier & Enrico Moretti & Florian S Peters, 2018. "Winning by Losing: Evidence on the Long-run Effects of Mergers," The Review of Financial Studies, Society for Financial Studies, vol. 31(8), pages 3212-3264.
    8. Lien Duong & Izan H. Y. Izan, 2012. "Consequences of Riding Takeover Waves: A ustralian Evidence," International Review of Finance, International Review of Finance Ltd., vol. 12(4), pages 399-434, December.
    9. Gao, Ning & Hua, Chen & Khurshed, Arif, 2021. "Loan price in mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 67(C).
    10. Sheng-Syan Chen & Yong-Chin Liu & I-Ju Chen, 2014. "Long-Run Stock Performance and Its Determinants for Asset Buyers," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 41(5-6), pages 685-716, June.
    11. Alexandridis, George & Hoepner, Andreas G.F. & Huang, Zhenyi & Oikonomou, Ioannis, 2022. "Corporate social responsibility culture and international M&As," The British Accounting Review, Elsevier, vol. 54(1).
    12. Clarke, Nicholas, 2022. "It's just a matter of time: Abnormal returns after firms stop repurchasing shares," Finance Research Letters, Elsevier, vol. 49(C).
    13. Marc Goergen & Luc Renneboog, 2004. "Shareholder Wealth Effects of European Domestic and Cross‐border Takeover Bids," European Financial Management, European Financial Management Association, vol. 10(1), pages 9-45, March.
    14. Malmendier, Ulrike & Tate, Geoffrey, 2008. "Who makes acquisitions? CEO overconfidence and the market's reaction," Journal of Financial Economics, Elsevier, vol. 89(1), pages 20-43, July.
    15. Dong, Gang Nathan & Gu, Ming & He, Hua, 2020. "Invisible hand and helping hand: Private placement of public equity in China," Journal of Corporate Finance, Elsevier, vol. 61(C).
    16. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance and Equity Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 107-156.
    17. Paul A. Gompers & Yuhai Xuan, 2012. "The Role of Venture Capitalists in the Acquisition of Private Companies," Chapters, in: James R. Barth & Chen Lin & Clas Wihlborg (ed.), Research Handbook on International Banking and Governance, chapter 28, Edward Elgar Publishing.
    18. Associate Prof. J.O Arumona & Associate Prof. Orbunde B.B & BELLO, Musibau, 2023. "Liquidity and Working Capital Management Practices on Firm Value of Listed Non-Financial Companies in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(11), pages 1049-1066, November.
    19. Low, Angie & Makhija, Anil K. & Sanders, Anthony B., 2007. "The Impact of Shareholder Power on Bondholders: Evidence from Mergers and Acquisitions," Working Paper Series 2007-5, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    20. Weston, J. Fred & Siu, Juan A., 2003. "Changing Motives for Share Repurchases," University of California at Los Angeles, Anderson Graduate School of Management qt9146588t, Anderson Graduate School of Management, UCLA.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:11:y:2019:i:24:p:6955-:d:294833. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.