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The effect of interlocking directorates on mergers and acquisitions in Brazil


This study investigates the effect of interlocking directorates on national and international mergers and acquisitions (M&A) in Brazil. Based on a sample of 153 large Brazilian firms in a time series (2000–2015), and using network techniques and regression analysis, this study addresses the hypothesis: board interlocking reduces the asymmetry of information in M&A, leading companies with a greater number of ties (degree centrality) to be more likely to participate in M&A. The results show that firms that have a larger number of ties with other firms through board interlocks (higher degree centrality) are more likely to perform M&A. Other network measures (closeness, eigenvector, betweenness, and structural holes) have no significant impact on the likelihood to participate in M&A. This study examines the impact of board interlocking on firms’ propensity to undertake M&A while controlling for financial, corporate governance, and country-level governance variables in the explanatory model. This paper also contributes by identifying the determinants of M&A performed by companies headquartered in emerging countries such as Brazil, a major participant in M&A processes at the international level.

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  1. Evidence of the impact of these macro-environmental variables on M&A can be observed in the finance and economics media. According to The Economist (The Economist 2016), the M&A announced in the first 9 months of 2016 amounted to US$ 2.5 trillion, 24% less than during the same period in 2015—the first decline in 3 years. The main reasons discouraging potential buyers were the vote of Britain to leave the European Union, uncertainty regarding the US presidential elections, and a decrease in raising capital.

  2. The global recovery of foreign direct investment (FDI) was strong in 2015, with global FDI flows increasing by 38%, their highest level since the 2008 crisis. This is the main factor behind the global economic recovery, as the total value of cross-border M&A increased from US$ 432 billion in 2014 to US$ 721 billion in 2015 (Burksaitiene and Garskaite-Milvydiene 2017).


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Wesley Mendes-Da-Silva acknowledges the financial support provided by The Brazilian National Council for Scientific and Technological Development- CNPq via Grant #309227/2019-4, and also thanks the comments of Arthur Ridolfo Neto and Roberto Borges Kerr.

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Correspondence to Julián Cárdenas.

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de Sousa Barros, T., Cárdenas, J. & Mendes-Da-Silva, W. The effect of interlocking directorates on mergers and acquisitions in Brazil. J Manag Gov 25, 811–839 (2021).

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  • Interlocking directorates
  • Mergers and acquisitions
  • Country-level governance
  • Brazil
  • International level
  • Regression analysis