Owners on both sides of the deal: Mergers and acquisitions and overlapping institutional ownership

Research output: Contribution to journalArticle

33 Scopus citations

Abstract

Using a corporate governance lens, this study considers owners with a stake in both the acquiring and the target firms in the context of mergers and acquisitions. A possible agency problem arises with regard to monitoring implications as managers may be able to take advantage of compromised monitoring because overlapping owners may focus on the aggregate value for both the acquiring and the target firms and nonoverlapping owners may be interested only in the acquirer's side of the deal. The results suggest that when more owners overlap in their ownership of both the acquiring and target firms, the acquiring firms are more likely to experience decreased shareholder value through merger and acquisition deals. This effect, however, can be constrained by stronger board control.

Original languageEnglish (US)
Pages (from-to)1114-1135
Number of pages22
JournalStrategic Management Journal
Volume31
Issue number10
DOIs
StatePublished - Oct 1 2010

Keywords

  • Corporate governance
  • Institutional ownership
  • Mergers and acquisitions

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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