Is social capital valuable? Evidence from mergers and acquisitions

Jo-Ann Suchard*, Giang Nguyen, Yuelin Wang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

We examine the impact of social capital on mergers and acquisitions using novel county-level social capital data from the Social Capital Project. We show that acquirers located in a high social capital county experience larger announcement returns. The effect is more pronounced when agency problems in the acquirers are more severe. We find evidence that the acquirer's social capital is associated with higher transaction synergies, better stock and operating performance, and shorter deal duration. Overall, the results support the shareholder value maximization view that social capital mitigates opportunistic and self-serving decisions by acquirer managers, leading to acquisitions that benefit acquirer shareholders in the short and long-term.
Original languageEnglish
Article number101509
JournalThe British Accounting Review
DOIs
Publication statusE-pub ahead of print - 13 Oct 2024

Keywords

  • Merger and acquisition
  • Shareholder value maximization
  • Social capital

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