The Library
Market reactions to acquisition announcements : the importance of signaling ‘why’ and ‘where’
Tools
Tools
Tools
Aalbers, Rick (H.L.), McCarthy, Killian J. and Heimeriks, Koen H. (2021) Market reactions to acquisition announcements : the importance of signaling ‘why’ and ‘where’. Long Range Planning, 54 (6). 102105. doi:10.1016/j.lrp.2021.102105 ISSN 0024-6301.
|
PDF
WRAP-Market-reactions-acquisition-importance-signaling-why-where-2021.pdf - Accepted Version - Requires a PDF viewer. Available under License Creative Commons Attribution Non-commercial No Derivatives 4.0. Download (1929Kb) | Preview |
Official URL: http://dx.doi.org/10.1016/j.lrp.2021.102105
Abstract
Acquisitions are risky events but not all acquisitions involve the same levels of risk. We suggest that the announced acquisition motive – the ‘why’ of the acquisition – is an important risk signal. We categorize acquisition motives and distinguish between acquisitions with ‘pure explore’ and ‘pure exploit’ motives. Recognizing that most acquisitions have multiple motives, we identify acquisitions with ‘ambidextrous’ motives – that is different combinations of explorative and exploitative motives – too. Then, building on recent contributions to signaling theory, we argue that the ‘why’ will matter more, if the ‘where’ pertains to a high-risk setting. We measure this using target-to-acquirer industry relatedness. We find that the market reacts more positively to pure acquisitions, aimed at exploration or exploitation, compared to ambidextrous acquisitions. We show that the market reacts more positively to ambidextrous acquisitions orientated towards exploitation than ambidextrous acquisitions orientated toward exploration. Finally, we find that relatedness moderates this relationship, in that the market is more willing to tolerate exploration in a related industry. Our core contribution is to the literatures on acquisition motives and ambidexterity. We provide new insights into the incidence of specific motives, the ways in which they are mixed, and the market's reaction to their announcement. In addition, we contribute to the emerging literature that takes on behavioral perspective of market reactions by showing that the ‘why’ and ‘where’ of an acquisition matter.
| Item Type: | Journal Article | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HD Industries. Land use. Labor | ||||||||
| Divisions: | Faculty of Social Sciences > Warwick Business School > Strategy & International Business Faculty of Social Sciences > Warwick Business School |
||||||||
| Library of Congress Subject Headings (LCSH): | Consolidation and merger of corporations, Strategic planning, High technology industries, Signals (Information theory) | ||||||||
| Journal or Publication Title: | Long Range Planning | ||||||||
| Publisher: | Elsevier | ||||||||
| ISSN: | 0024-6301 | ||||||||
| Official Date: | December 2021 | ||||||||
| Dates: |
|
||||||||
| Volume: | 54 | ||||||||
| Number: | 6 | ||||||||
| Article Number: | 102105 | ||||||||
| DOI: | 10.1016/j.lrp.2021.102105 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
| Date of first compliant deposit: | 6 July 2021 | ||||||||
| Date of first compliant Open Access: | 10 April 2023 |
Request changes or add full text files to a record
Repository staff actions (login required)
 |
View Item |
Downloads
Downloads per month over past year
