How to make a deal

The Role of Rankings and Personal Ties in Creating Trust in the Mergers and Acquisitions Market

Dados Bibliográficos

ID4237352
AutoresValérie Boussard (Université Paris Nanterre), Olivier Godechot (0000-0003-3199-8144, Centre National de la Recherche Scientifique), Nicolas Woloszko (0000-0001-5106-8388, Organisation de Coopération et de Développement Economiques)
Ano2019
Volume17
Fascículo2
Páginas311-336
Data de publicação2019-04-01
Peer ReviewedSim
Open AccessNão
TipoARTICLE
PeriódicoSocio-Economic Review (JOURNAL)
Identificadores do periódicoISSN: 1475-1461 • E-ISSN: 1475-147X
DOI10.1093/ser/mwx056
OpenAlexW2780566789
IdiomaEN
Citações recebidas5
Referências citadas55

On the mergers and acquisitions (M&A) market, buyers and sellers resort to experts in order to secure deals. But as these experts might be prone to opportunism, firms need to find a way to build trust. We identify two trust devices: social ties and public rankings. We explore whether these personal and impersonal devices are substitutes, independent or complementary. We study the French M&A market through a mixed-method approach. We show that both previous contacts and league table rankings of firms contribute to trust and to making deals. These trust devices are all the more likely to be used if the deal is risky, especially within the sell side (more at risk). We also find that firms tend to make deals only with other firms at the same level in the rankings. Finally, we find some evidence of substitution between rankings and personal ties, especially for low-value deals

Business · Economics · Industrial organization · Interpersonal ties · League table · Market economy · Mergers and acquisitions · Opportunism · Order (exchange · Value (mathematics · Experimental Behavioral Economics Studies · Game Theory and Applications · Social Capital and Networks · Finance · Marketing