Small World of Inter-firm Network an Firm's Acquisition Behaviour - An Evidence from India

Biswas, Shreya (2015): Small World of Inter-firm Network an Firm's Acquisition Behaviour - An Evidence from India.

Abstract

Using a sample of listed firms in India, the study finds that the inter-firm network on account of director interlocks is a small world and the network has become more integrated since the introduction of corporate governance regulations in the country. Firm level analysis finds a negative relation between average path length and probability of acquiring indicating the importance of faster reach of information among the firms within the network. It also finds a non-linear relation given by inverted U-shaped curve between firm level clustering and probability of acquiring. Initially, increase in clustering has a positive effect through the informational quality effect; however at higher levels the negative informational redundancy effect dominates leading to a curvilinear relation.

• Item Type: MPRA Paper
• Language: English
• Keywords: Corporate Governance, Small-world, Director Interlocks, Inter-firm Network, Acquisitions
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification, and Scope

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