How Does Acquisition Experience Create Value? Evidence From a Regulatory Change Affecting the Information Environment

Castellaneta F., Conti R. (2017). How does acquisition experience create value? Evidence from a regulatory change affecting the information environment. European Management Journal 35(1): 60-68

30 Pages Posted: 11 Jan 2019

See all articles by Francesco Castellaneta

Francesco Castellaneta

SKEMA Business School, Université Côte d'Azur (GREDEG)

Raffaele Conti

Bocconi University

Date Written: December 8, 2018

Abstract

We argue that acquisition experience translates more readily into learning to select than into learning to restructure. The acquisition selection stage is less causally ambiguous than the subsequent restructuring stage — because its web of activities is less complex and its outcome less delayed — and causal ambiguity undermines learning from experience. Therefore, we hypothesize that more-experienced acquirers will perform particularly well when the information environment is less transparent and thus the ability to select targets (versus to restructure them) is more important. Relying on a unique database of 1388 acquisitions realized by private equity firms in the United States between 1975 and 2005, and exploiting a regulatory change affecting the information environment faced by acquirers when selecting their targets, we find results largely consistent with our theory.

Keywords: Acquisitions, Organizational Learning, Private Equity, Panel Data, Difference-in-Differences Regression

Suggested Citation

Castellaneta, Francesco and Conti, Raffaele, How Does Acquisition Experience Create Value? Evidence From a Regulatory Change Affecting the Information Environment (December 8, 2018). Castellaneta F., Conti R. (2017). How does acquisition experience create value? Evidence from a regulatory change affecting the information environment. European Management Journal 35(1): 60-68, Available at SSRN: https://ssrn.com/abstract=3298040

Francesco Castellaneta (Contact Author)

SKEMA Business School, Université Côte d'Azur (GREDEG) ( email )

France

Raffaele Conti

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

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