Research on Mechanism of Acquisitions Performance Feedback from Interlock Directors in Context of Principal-Agent

This paper studies the effect of interlock directors’ performance feedback on the acquisition performance of focal firms from the perspective of principal-agent. The results indicate that in the acquisition network connected by interlock directors, the more successful the performance feedback transmitted by interlock directors, the worse the acquisition performance of the focal firm. Moreover, this effect is strengthened when the performance feedback transmitted by interlock shareholders is more successful. However, this effect can be weakened when foal firms possess more structural holes. In a high uncertainty environment, the moderating effect of performance feedback transmitted by interlock shareholders will be further enhanced. From the perspective of principal-agent, we open a new view of interlock directories for the influencing mechanism of performance feedback on acquisition performance. Also, it provides a new idea for the mechanism of performance feedback in the context of acquisition network