Session 327

Market Response to M&A

Track F

Date: Tuesday, September 23, 2014

 

Time: 08:00 – 09:15

Paper

Room: Copenhague


Session Chair:

  • William Newburry, Florida International University

Title: Are Good Deeds Rewarded? Experience, Reputation and Societal Responsibility Impacts on Stock Market M&A Reactions

Authors

  • Abrahim Soleimani, Eastern Washington University
  • William Schneper, Franklin & Marshall College
  • William Newburry, Florida International University

Abstract: We examine the impacts of acquirers’ acquisition experience, corporate reputations, and corporate social responsibility on stock market reactions to acquisition announcements. We argue that under uncertain and complex conditions, intangible assets reveal vital information about the attributes and capabilities of a firm that consequently influence market expectations about the firm’s strategic initiatives. Using an event study of a sample of 296 acquisition announcements, we find that an acquirer's acquisition experience has a U-shaped relation with market responses to an acquisition. Results further show that an acquirer’s reputation and social performance both negatively impact stock market reactions. Finally, the analyses demonstrate that reputation magnifies the impact of acquisition experience on market responses to acquisition announcements.

Title: Evaluation of IPO-Firm Takeovers: An Event Study

Authors

  • Erik Lehmann, Augsburg University
  • Manuel Schwerdtfeger, Leibniz University of Hanover

Abstract: This event study of public takeover announcements focuses on acquisitions targeted at public IPO-firms from German Stock Markets. While empirical studies typically focus on firm patents as a predictor of take-over reactions, we further control for the patents owned by the CEO as the key inventor of the firm. The results confirm that while the stock market positively evaluates the takeover of high innovative firms, market participants are pessimistic about takeovers where the CEO and founder controls critical and indispensable intangible assets like firm specific human capital. We conclude that the acquirer’s post-acquisition performance depends on the continued access to the targets’ specific intangible assets, which is not necessarily the case for the founder’s specific human capital.

Title: The Role of Technology and Origin in M&A Performance

Authors

  • Yuriy Zhovtobryukh, BI Norwegian Business School
  • Torger Reve, BI Norwegian Business School

Abstract: Identification of M&A characteristics explaining the variance in the acquiring firm performance remains a major issue in strategy. In an attempt to address it, we consider the performance effects of the type of M&A (technological or non-technological) and the origin (cross-border or domestic). We find strong empirical support to our hypotheses that acquirers in technological M&A earn significantly higher returns on announcement than those in non-technological M&A both in domestic and cross-border deals, and that the difference increases in cross-border M&A. The results are robust to alternative abnormal return measures and competing explanations.

Title: Too Much Information? A Strategic Disclosure View of M&A Announcements

Authors

  • Eunjoo Yi, University of Pittsburgh

Abstract: Information disclosure by managers can be viewed as strategic behavior intended to influence the information receivers’ perception of the firm, because of which the medium of disclosure is a highly consequential choice. This study examines the moderating effect of rich media, such as conference calls or webcasts, on the relationship between deal attributes and market response to M&A announcements. I hypothesize that rich media use can exacerbate the negative market response to deals that possess value-destroying characteristics, such as high relative deal size. In other words, the strategic disclosure perspective suggests that deals that are likely to be greeted poorly by the market will do even worse when announced using rich media. The main theoretical insight is that rich media announcements run the risk of magnifying negative deal attributes and thus influence investor response. Data on M&A announcements made by S&P 500 companies from 2005 to 2011 supports the hypotheses.

All Sessions in Track F...

Sun: 08:00 – 09:15
Session 400: Teaching Corporate Strategy: Insights and Opportunities
Sun: 11:15 – 12:30
Session 401: Research Synergies in Corporate Strategy and Entrepreneurship
Sun: 15:45 – 17:00
Session 398: Corporate Strategy and Corporate Finance: Continuing the Research Conversation
Sun: 17:15 – 18:30
Session 602: Corporate Strategy IG Business Meeting
Mon: 08:00 – 09:15
Session 308: How do firms grow? Canvasing Different Perspectives
Session 316: Acquisitions and Divestures: Antecedents and Consequences
Mon: 11:00 – 12:15
Session 319: International Corporate Strategy
Mon: 14:45 – 16:00
Session 437: Corporate Structure, Resource allocation, and Portfolio planning
Mon: 16:30 – 17:45
Session 325: Product Scope Strategy in Different Empirical Contexts
Tue: 08:00 – 09:15
Session 327: Market Response to M&A
Tue: 11:00 – 12:15
Session 328: New Angles of Examining Acquisition Strategies
Tue: 15:30 – 16:45
Session 399: The Role of Industry/Environmental Conditions in Corporate Strategy
Tue: 17:15 – 18:30
Session 318: The Boundary of the Firm


Strategic Management Society

Madrid