Non-controlling shareholders' network and the reliability of merger and acquisition performance commitments: Governance or collusion?

This study examines the effect of non-controlling shareholders' network on the reliability of performance commitment (PC) agreements signed during merger and acquisitions (M&A), based on A-share listed companies in China during 2008-2022. Findings indicate that higher noncontrolling shareholders' network centrality is significantly associated with an increased PC reliability. Mechanism tests reveal that this correlation is driven by the network's embedded advantage to reduce M&A premiums and curb insider shareholding reduction. Furthermore, this study highlights that the networks of pressure-resistant institutional investors, non-state-owned legal entity shareholders, and individual investors play crucial roles in enchaining PC reliability.