Abstract
We show that greater board network centrality is associated with lower acquirer stock returns in the Chinese capital market. This negative effect is mainly due to inside directors' networks, and is stronger for state-owned enterprises. Firms with greater board centrality tend to engage in more value-destroying mergers and acquisitions, and board directors with more centrality utilize their connections for private benefits at the expense of shareholder wealth. Consistent with an integrated agency–resource dependence perspective, the results imply both board directors' motivation derived from their independence and social capital–related ability are important considerations in their monitoring and advising functions.
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