The Influence of Close Connections Between Boards of Directors on Propensity for M&As of Russian Companies

Recently, the practice of directors serving several boards simultaneously has become widespread, resulting in the formation of the so-called interlocking directorates. The study of the influence of interlocking directorates in the context of the impact of this practice on the M&A process is of particular interest because it is the board members who make the final strategic decisions regarding participation in M&A transactions. Current research is dedicated to the analysis of the impact of board interlocks on Russian companies’ propensity to undertake M&A deals during the period from 2014 to 2021. According to the results, the increase in the number of company’s direct ties, decrease in the distance of company’s board connections as well as increase in connections with influential companies within the network negatively affect company’s probability to undertake M&A. At the same time, belonging to a tight-knit group (local cluster) or to the main group of companies with closely connected directorates (main component) does not affect the propensity for M&A. The research results contribute to understanding the specifics of the impact of interlocking directorates on M&A deal indicators in the context of Russia. Additionally, the results will be beneficial for the top management of companies in making strategic decisions, as well as for stakeholders in making financial and investment decisions regarding participation in the deal.