Developments and challenges of measuring M&A performance on a corporate and macroeconomic levels

Authors

  • Karolis Andriuskevicius Vilnius University
  • Remigijus Ciegis Vilnius University

DOI:

https://doi.org/10.24136/oc.v8i2.13

Keywords:

M&A, developments, methodology, strategy, economic model, growth

Abstract

Research background: This study presents the results of the research which aimed to iden-tify and critically discuss existing methodologies in the merger and acquisition field. Value creation to merging and acquiring firms and national countries constitute the center of the research. This study distinguishes between specific methodologies employed to gauge M&A performance on a micro- (corporate) and macro- (economy and society) economic levels. The final section of the paper concludes with a theoretical methodological framework integrating methodologies employed to measure M&A performance on a firm level and methodologies measuring consequences and effects of M&A on the economy. The aim of the analysis described in the paper is to ascertain and evaluate theoretically existing methodologies used in empirical studies that would allow proper and critical understanding of the results of various findings in the holistic and global M&A area.
Purpose of the article: The purpose of the paper is to investigate and critically discuss the methodologies employed within the M&A performance framework with the focus on specific anticipated outcomes of the M&A deal and methodology measuring this outcome. The following objectives are being raised: (1) To identify recent developments in the M&A market and determine challenges and changes they encompass; (2) To identify and critically discuss anticipated outcomes of the M&A deal and existing methodologies measuring M&A performance on the corporate level; (3) To identify and critically discuss anticipated outcomes of the M&A deal on the economy and methodologies measuring consequences and effects of M&As on the macro- economic level; (4) To integrate methodologies measuring M&As performance on a micro- and macro- eco-nomic levels into theoretical methodological framework enabling scholars and practitioners to evaluate M&A performance from a holistic perspective.
Methods: Based on previous studies, the authors conduct a structured literature review aimed to critically discuss and evaluate developments and challenges of measuring M&A performance on corporate and macroeconomic levels. The research is carried out as a struc-tured assessment of past literature. The findings from scientific articles and studies by various scholars are being categorized, grouped and summarized to discern a meta?analytic view of the work carried out to date. Finally, deep analysis of scientific literature, logical comparative analysis, systematization of scientific article and business cases are employed in the article.
Findings & Value added: The paper evidences developments and challenges of measuring M&A performance on corporate and macroeconomic levels.  The re-search elaborates on several key developments in M&A methodology and performance studies carried out in empirical works during the last two decades. The findings help to independently and objec-tively assess performance of M&A from a holistic perspective.

Downloads

Download data is not yet available.

References

Agrawal, A., Jaffe, J. F., & Mandelker, G. N. (1992). The postmerger performance of acquiring firms: a re-examination of an anomaly. Journal of Finance, 47.
Andrade, G., Mitchell, M., & Stafford, E. (2001a). New evidence and perspectives on mergers. Journal of Economic Perspectives, 15(2).
Angwin, D. (2004). Speed in M&A integration: the first 100 days. European Management Journal, 22.
Bruner, R. F. (2004). Applied Mergers and Acquisitions. New York: John Wiley & Sons.
Caiazza, R., & Volpe, T. (2015). M&A process: a literature review and research agenda. Business Process Management Journal, 21(1). doi: 10.1108/BPMJ-11-2013-0145.
Das, A., & Kapil, S. (2012). Explaining M&A performance: a review of empirical research. Journal of Strategy and Management, 5(3). doi: 10.1108/1755425 1211247580.
GFC/Net - Global Financial Communication Network (2007). Economic Patriotism/Nationalism Likely to Intensify According to Business Journalists Worldwide. Business Wire, 12.11.2007. Retrieved form http://www.allbusiness.com/ trade-development/trade-development-finance/ 542 0005-1.html.
Goel, A. M., & Thakor, A. V. (2010). Do envious CEOs cause merger waves? Review of Financial Studies, 23(2). doi: 10.1093/rfs/hhp088.
Gort, M. (1969). An economic disturbance theory of mergers. Quarterly Journal of Economics, 83(4). doi: 10.2307/1885453.
Gorton, G., Kahl, M., & Rosen, R. J. (2009). Eat or be eaten: a theory of mergers and firm size. Journal of Finance, 64(3).
Haleblian, J., & Finkelstein, S. (1999). The influence of organizational acquisition experience on acquisition performance: a behavioral learning perspective. Administrative Science Quarterly, 44.
Harford, J. (2005). What drives merger waves? Journal of Financial Economics, 77(3). doi: 10.1016/j.jfineco.2004.05.004.
Homburg, C., & Bucerius, M. (2006). Is speed of integration really a success factor of mergers and acquisitions? An analysis of the role of internal and external relatedness. Strategic Management Journal, 4.
Yaghoubi, R., Yaghoubi, M., Locke, S., & Gibb, S. (2016). Mergers and acquisitions: a review. Part 1. Studies in Economics and Finance, 33(1). doi: 10.1108/SEF-03-2015-0078 .
Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48(3). doi: 10.2307/2329018.
Jovanovic, B., & Rousseau, P. L. (2002). The Q-theory of mergers. American Economic Review, 92(2). doi: 10.1111/j.1468-5957.2011.02234.x.
Jovanovic, B., & Rousseau, P. L. (2008). Mergers as reallocation. Review of Economics and Statistics, 90(4). DOI: 10.1162/rest.90.4.765.
Kaplan, S. N. (2000). Mergers and productivity. Chicago and London: University of Chicago Press.
Kusewitt, J. (1985). An exploratory study of strategic acquisition factor relating to performance. Strategic Management Journal, 6. doi: 10.1002/smj.4250060205.
Lang, L. H. P., Stulz, R., & Walkling, R. A. (1989). Managerial performance. Tobin?s Q, and the gains from successful tender offers. Journal of Financial Economics, 24(1). doi: 10.1016/0304-405X(89)90075-5.
Lu, Q. (2004). Do mergers destroy value? Evidence from failed bids. Working Paper, Kellogg School of Management, Northwestern University.
Maček, A. (2012). A comparative analysis of the economic effects of cross-border mergers and acquisitions in European countries. In V. Bobek (Ed.). International Trade from Economic and Policy Perspective". InTech. doi: 10.5772/48342.
Markides, C., & Oyon, D. (1998). International acquisitions: do they create value for shareholders? European Management Journal, 16.
Morck, R., Shleifer, A., & Vishny, R. W. (1990). Do managerial objectives drive bad acquisitions? Journal of Finance, 45(1). DOI: 10.3386/w3000.
Morley, J., & Ward, T. (2009). ERM case studies: the consequences of mergers and acquisitions. European Monitoring Centre on Change. European Foundation for the Improvement of Living and Working Conditions. Retrieved form http://www.eurofound.europa.eu/observatories/emcc/comparative-information/ erm-case-studies-the-consequences-of-mergers-and-acquisitions.
Meglio, O., & Risberg, A. (2010). Mergers and acquisitions-time for a methodological rejuvenation of the field? Scandinavian Journal of Management, 26. doi: 10.1016/j.scaman.2009.11.002.
Mitchell, M. L., & Mulherin, J. H. (1996). The impact of industry shocks on takeover and restructuring activity. Journal of Financial Economics, 41(2). doi: 10.1016/0304-405X(95)00860-H.
Neto, P., Brandao, A., & Cerqueira, A. (2008). The impact of FDI, cross border mergers and acquisitions and greenfield investments on economic growth. FEP Working Papers. 291.
Papadakis, V. M. (2005). The role of broader context and the communication program in merger and acquisition implementation success. Management Decision, 43.
Papadakis, V., M., & Thanos, I., C. (2010). Measuring the performance of acquisitions: an empirical investigation using multiple criteria. British Journal of Management, 21. doi: 10.1111/j.1467-8551.2009.00671.x.
Ramaswamy, K. (1997). The performance impact of strategic similarity in horizontal mergers: evidence from the US. Academy of Management Journal, 40.
Roll, R. (1986). The hubris hypothesis of corporate takeovers. Journal of Business, 59(2). doi: 10.1086/296325.
Rhodes-Kropf, M., & Viswanathan, S. (2004). Market valuation and merger waves. Journal of Finance, 59(6). doi: 10.1111/j.1540-6261.2004.00713.x.
Rhodes-Kropf, M., Robinson, D. T., & Viswanathan, S. (2005). Valuation waves and merger activity: the empirical evidence. Journal of Financial Economics, 77(3). doi: 10.2139/ssrn.412680.
Sedláček, J., Valouch, P., & Konečný, A. (2011). Analysis of merger and acquisition development in the Czech Republic in 2001?2010. In 8th International scientific conference Financial management of firms and financial institutions. Ostrava: VŠB-TU Ostrava.
Servaes, H. (1991). Tobin?s Q and the gains from takeovers. Journal of Finance, 46(1). doi: 10.1111/j.1540-6261.1991.tb03758.x.
Shleifer, A., & Vishny, R. W. (2003). Stock market driven acquisitions. Journal of Financial Economics, 70(3). doi: 10.3386/w8439.
Stigler, G. J. (1950). Monopoly and oligopoly by merger. American Economic Review, 40(2).
Sudarsanam, S., & Mahate, A. A. (2003). Glamour acquirers, method of payment and post-acquisition performance: the UK evidence. Journal of Business Finance and Accounting, 30.
Toxvaerd, F. (2008). Strategic merger waves: a theory of musical chairs. Journal of Economic Theory, 140(1). doi: 10.1016/j.jet.2007.05.003.
Tichy, G. (2001). What do we know about success and failure of mergers? Rejoinder. Journal of Industry, Competition and Trade, 1(4). doi:10.1023/A:101 9575127113.
Vaara, E, Tienari, J., Sauri, N., & Bjoerkman, I. (2001). Global capitalism meets national spirit: discourses in media texts on a cross-border acquisition. Paper presented at the 2nd Critical Studies Conference, Manchester, 09.11.2004. Retrieved from: http://www.mngt.waikato.ac.nz/ejrot/cmsconference/2001/Papers/ Lanaguage%20of%20New%20Capitalism/Vaara.pdf.
Wang, C., & Xie, F. (2009). Corporate governance transfer and synergistic gains from mergers and acquisitions. Review of Financial Studies, 22(2). doi: 10.1093/rfs/hhn018.
Zollo, M., & Meier, D. (2008). What is M&A performance? Academy of Management Perspectives, 22(3). doi: 10.5465/AMP.2008.34587995.
Zollo, M., & Singh, H. (2004). Deliberate learning in corporate acquisitions: post-acquisition strategies and integration capability in U.S. bank mergers. Strategic Management Journal, 25.

Downloads

Published

2017-06-30

How to Cite

Andriuskevicius, K., & Ciegis, R. (2017). Developments and challenges of measuring M&A performance on a corporate and macroeconomic levels. Oeconomia Copernicana, 8(2), 199–220. https://doi.org/10.24136/oc.v8i2.13

Issue

Section

Articles

Similar Articles

1 2 3 4 5 6 7 8 9 10 > >> 

You may also start an advanced similarity search for this article.