Management practices and M&A success

93 Pages Posted: 7 Dec 2020 Last revised: 13 Sep 2021

See all articles by Manthos D. Delis

Manthos D. Delis

Montpellier Business School

Maria Iosifidi

University of Surrey - Surrey Business School

Pantelis Kazakis

University of Glasgow - Adam Smith Business School

Steven Ongena

University of Zurich - Department of Banking and Finance; NTNU Business School; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)

Mike G. Tsionas

Montpellier Business School

Multiple version iconThere are 2 versions of this paper

Date Written: December 5, 2020

Abstract

We study whether management practices determine merger and acquisition (M&A) success. We model management as an unobserved (latent) variable in a standard microeconomic model of the firm and derive firm-year management estimates. We validate these estimates against benchmark survey data on management practices and by using Monte Carlo simulation. We show that our measure is among the most important determinants of value creation in M&A deals, substantially increasing the predictive power of models that explain cumulative abnormal returns. Thus, we offer a measure of management practices that identifies the best-performing M&As. Our results are robust to the inclusion of acquirer fixed effects and many control variables, and to several other sensitivity tests. We identify the Q-theory as the key mechanism driving our results.

Keywords: Mergers and acquisitions; Management practices; Acquirer returns

JEL Classification: G14; G34; J24

Suggested Citation

Delis, Manthos D. and Iosifidi, Maria and Kazakis, Pantelis and Ongena, Steven R. G. and Ongena, Steven R. G. and Tsionas, Mike G., Management practices and M&A success (December 5, 2020). Swiss Finance Institute Research Paper No. 20-102, Available at SSRN: https://ssrn.com/abstract=3743980 or http://dx.doi.org/10.2139/ssrn.3743980

Manthos D. Delis

Montpellier Business School ( email )

2300 Avenue des Moulins
Montpellier, 34080
France

Maria Iosifidi

University of Surrey - Surrey Business School ( email )

Guildford, Surrey GU2 8DN
United Kingdom

Pantelis Kazakis

University of Glasgow - Adam Smith Business School ( email )

Adam Smith Business School
Gilbert Scott Building
Glasgow, Scotland G12 8QQ
United Kingdom

HOME PAGE: http://sites.google.com/site/panteliskazakis/home

Steven R. G. Ongena (Contact Author)

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

NTNU Business School ( email )

Norway

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Mike G. Tsionas

Montpellier Business School ( email )

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