It Takes Two to Tango: Interlockings and Partial Equity Ownership

It Takes Two to Tango: Interlockings and Partial Equity Ownership | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article It Takes Two to Tango: Interlockings and Partial Equity Ownership Vittoria Cerasi, Maria Rosa Battaggion This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6702164/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract We study the role of interlocking directorates as a pre-deal mechanism in a minority equity acquisition among companies competing in the same product market. Since the gain from the deal depends upon the intrinsic private value of the target, the acquirer has to elicit the true value of the equity stake through an optimal design of the bid in the context of adverse selection. Alternatively, the acquiring company might propose to the target to open the board to one of its executives to disclose the value. For this agreement to succeed, the target has to accept this proposal. We built a novel framework to study the conditions for this interlocking to occur, together with the terms of the acquisition of the equity stake. In this framework, we emphasize the policy implications of antitrust. An interlocking directorate is not necessarily ancillary to a collusive agreement. However, it might be the first step to acquiring a minority equity stake in the product market between rival companies. JEL classification: D4 (Market Structure and Pricing); G3 (Corporate Finance and Governance); L2 (Firm Objectives, Organization and Behavior). Interlocking Directorates Partial Equity Ownership Information Oligopoly Full Text Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-6702164","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":469156754,"identity":"47e68143-b0f1-428e-a96e-310ab2e4f01c","order_by":0,"name":"Vittoria Cerasi","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAABEklEQVRIie3RsUrDQBjA8fs4aJYrt34O2ldoyNKh0lcxFK5TXVwcSrkSSJaUrMlb9AE6nBwkSx4iIOjicOLSIYJNS9XSWB0d7j98kC/5cQchxGb7j9HdxMMjXh29Uq2EgvxOvO1oNoSwhrSb/QeHfPlJmtFC+gUvqtf1oEccnZtNPZgk0fK5MrPh7cghoE0L0RQW6RO6kolxtgxxmpaFu0hzcffTxS4CCgFTCBKZR7oSpysUEHSl9uNfyEgif4O6xkm/Ie9nCKd74m9PoZR18GZH4Dxxs1ThOGTCo5chummZQxbnwo81SFWekg5/qIxR8+vE0Y/wUs97PAqJ2cyGfpRobe5PyZdt2R3/MZvNZrP9vQ/VCWJ830IF1QAAAABJRU5ErkJggg==","orcid":"https://orcid.org/0000-0002-1384-6457","institution":"Corte dei Conti","correspondingAuthor":true,"prefix":"","firstName":"Vittoria","middleName":"","lastName":"Cerasi","suffix":""},{"id":469156755,"identity":"8b606247-5eae-466a-baa8-6168298ac29e","order_by":1,"name":"Maria Rosa Battaggion","email":"","orcid":"","institution":"University of Bergamo: Universita degli Studi di Bergamo","correspondingAuthor":false,"prefix":"","firstName":"Maria","middleName":"Rosa","lastName":"Battaggion","suffix":""}],"badges":[],"createdAt":"2025-05-19 22:23:15","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-6702164/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-6702164/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":89315886,"identity":"111c53ed-a159-4a5f-9df6-c0f6bac650db","added_by":"auto","created_at":"2025-08-18 16:59:12","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":656507,"visible":true,"origin":"","legend":"","description":"","filename":"PaperJIBE2025manuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-6702164/v1_covered_5cd92244-348c-478d-8eb4-fabd13d71055.pdf"}],"financialInterests":"","formattedTitle":"It Takes Two to Tango: Interlockings and Partial Equity Ownership","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Interlocking Directorates, Partial Equity Ownership, Information, Oligopoly","lastPublishedDoi":"10.21203/rs.3.rs-6702164/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6702164/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eWe study the role of interlocking directorates as a pre-deal mechanism in a minority equity acquisition among companies competing in the same product market. 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