| Evidence of Acquiror Learning in Mergers and Acquisitions, 1985-1995 |
| | Hayward, Mathew | London Business School | mhayward@lbs.ac.uk | 44 171 262 5050 |
| | Organizational learning theory is used to explain and predict whether and when acquirors learn from their direct acquisition experience. Acquisitions of 120 acquirors are tracked from 1985-1995 to explore this issue. Results suggest that acquirors experience better acquisition performance when they are managed by CEOs with longer tenure at the firm; there is a moderate temporal interval since the prior acquisition; they have previously undertaken acquisitions of different sizes; and they have made small prior acquisition mistakes;and when they are managed by executives with longer tenure at teh firm who do not use acquisition advisors. |
| | Keywords: learning; acquisitions |
| Persistence in the M&A decision process: Sticky decisions or overcommitment? |
| | Puranam, Phanish | U. of Pennsylvania | puranam@management.wharton.upenn.edu | 215-898-1231 |
| | Singh, Harbir | U. of Pennsylvania | singhh@wharton.upenn.edu | (215) 898-6752 |
| | Powell, Benjamin Caldwell | U. of Pennsylvania | powell@management.wharton.upenn.edu | (215)-898-7722 |
| | In this paper, we investigate the dynamics that influence decisions to bid for corporate acquisitions. Using a
quasi-experimental design, we explore how decision makers react to negative information in the due
diligence phase of an acquisition. Our participants were 120 second year MBA students at a major North
American research university. Our analysis ruled out the possibility that persistence was caused by the
presence of competition or publicity, two of the variables that have been associated with escalating
commitment. We find that managerial persistence in pursuit of an acquisition in spite of negative information
results from a tendency to discount negative information up to a point, because such information is judged to
be noisy and possibly biased. Furthermore, participants with higher experience tended to ignore small
amounts of negative information but reacted more strongly to large amounts of negative information than their
less experienced colleagues. We conclude by suggesting that overcommitment may have been prematurely
identified in the literature as the driver of overpayment in acquisition decisions; rather our experimental
evidence suggests a tendency towards decision "stickiness" (i.e. a tendency to disregard small quantities
of negative information which is suspected to be noisy). |
| | Keywords: Acquisitions; Escalating Commitment; Overcommitment |
| The Impact of Mergers and Acquisitions on Employment and Labor Efficiency |
| | O'Shaughnessy, K. C. | Western Michigan U. | kc.oshaughnessy@wmich.edu | (616)-771-9912 |
| | Flanagan, David J. | Western Michigan U. | David.Flanagan@wmich.edu | (616)-387-6051 |
| | Economic efficiency is the main rationale in support of Mergers and Acquisitions (M&As). An important source of efficiency
gains in M&As is human assets. Given the rising recognition that human resources are a key source of competitive advantage,
an understanding of how M&As impact employment is of growing importance. This paper examines factors that influence the
changes in employment and labor efficiency following M&As. A sample of 84 large M&As that occurred between 1987 and 1995
is examined. The results of our analysis indicate that the relatedness of combining firms involved in M&As and layoff intentions
by the acquirer have a negative impact on employment. We also find that, although relatedness and layoff announcements are
not associated with changes in labor efficiency, changes in labor efficiency are associated with the hostile/friendly nature of the
transaction.
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| | Keywords: Mergers; Employment; Labor Efficiency |
| A Review of Recent Research on Mergers and Acquisitions |
| | Graebner, Melissa E. | Stanford U. | graebner@leland.stanford.edu | (650)-723-5736 |
| | Merger and acquisition (M&A) activity continues to increase both in volume and in importance to firm strategy. New perspectives have emerged to predict and explain this activity. This article summarizes and reviews the research since 1990 on mergers and acquisitions. It focuses on research regarding factors that predict M&A activity and regarding determinants of post-transaction success. The article concludes by reviewing the progress that has been made and suggesting areas for future research. |
| | Keywords: Mergers; Acquisitions; |