TY - JOUR
T1 - Is social capital valuable? Evidence from mergers and acquisitions
AU - Suchard, Jo-Ann
AU - Nguyen, Giang
AU - Wang, Yuelin
PY - 2024/10/13
Y1 - 2024/10/13
N2 - 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.
AB - 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.
KW - Merger and acquisition
KW - Shareholder value maximization
KW - Social capital
UR - http://www.scopus.com/inward/record.url?scp=85209539526&partnerID=8YFLogxK
U2 - 10.1016/j.bar.2024.101509
DO - 10.1016/j.bar.2024.101509
M3 - Article
SN - 0890-8389
JO - The British Accounting Review
JF - The British Accounting Review
M1 - 101509
ER -