Left at the Altar? Target Uncertainty, Acquirer Strategic Capabaility, and Dyadic Alignment in Mergers and Aquisitions

54 Pages Posted: 16 Jun 2005

See all articles by Ruth V. Aguilera

Ruth V. Aguilera

Northeastern University - Department of International Business and Strategy

John Dencker

Northeastern University - D'Amore-McKim

Xavier Escandell

University of Illinois at Urbana-Champaign

Date Written: May 2007

Abstract

In this paper, we analyze data on the world's largest merger and acquisition (M&A) announcements in the 1990s to explore the relational factors that determine their completion or withdrawal. Existing research on this little understood phenomenon in the M&A process typically focuses on the characteristics and actions of acquirer firms to understand financial and strategic M&A elements. We offer a new perspective by focusing on the dyadic relationship between acquirer and target firms. Controlling for strategic and financial factors, we find that the completion of an announced M&A is more likely to the extent that the relational capabilities stemming from country-level, industry-level and organizational-level factors generate a cooperative and trustworthy relationship. We conclude by discussing theoretical and managerial implications of our multi-level relational model.

Keywords: merger, acquisition, M&A, corporate governance, announcements

JEL Classification: D21, D23, D74, D81, G34, F23, G3, F23, K21

Suggested Citation

Aguilera, Ruth V. and Dencker, John and Escandell, Xavier, Left at the Altar? Target Uncertainty, Acquirer Strategic Capabaility, and Dyadic Alignment in Mergers and Aquisitions (May 2007). Available at SSRN: https://ssrn.com/abstract=743886 or http://dx.doi.org/10.2139/ssrn.743886

Ruth V. Aguilera (Contact Author)

Northeastern University - Department of International Business and Strategy ( email )

Boston, MA 02115
United States

John Dencker

Northeastern University - D'Amore-McKim ( email )

360 Huntington Ave.
Boston, MA 02115
United States

Xavier Escandell

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

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