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M&A capability and long-term firm performance: a strategic management perspective

Eduardo Vinocur (Crummer Graduate School of Business, Rollins College, Winter Park, Florida, USA)
Halil Kiymaz (Crummer Graduate School of Business, Rollins College, Winter Park, Florida, USA)
Misty L. Loughry (Crummer Graduate School of Business, Rollins College, Winter Park, Florida, USA)

Journal of Strategy and Management

ISSN: 1755-425X

Article publication date: 8 August 2022

Issue publication date: 20 April 2023

783

Abstract

Purpose

This paper investigates the puzzle of mergers and acquisitions’ (M&A) long-term performance through the strategic management perspective. The authors measure the M&A capability construct and test its relationship with the long-term performance of the firms.

Design/methodology/approach

The study employs a natural language processing (NLP) methodology to quantify unstructured data from 564 annual reports and 2,602 M&A synopses from January 01, 2013 to December 31, 2016. The authors combine qualitative document analysis with a quantitative method using a multiple regression analysis model.

Findings

Among serial acquirers, M&A capability positively relates to long-term firm performance measured by both return on equity and price-to-book value. The authors also find that the size of the company and the number of acquisitions influence the M&A capability, confirming previous results in the literature.

Research limitations/implications

Detailed M&A management plans are usually confidential and not fully reported. Future studies could employ enhanced artificial intelligence tools to measure the M&A capability construct beyond filing reports, encompassing interviews, social media posts, press releases and other unstructured data sources.

Practical implications

Firms can improve their M&A capability by understanding the underlying foundation of the construct provided in the research. Additionally, researchers can build on the methodology employed using advanced NLP tools to measure M&A capability.

Social implications

Improving their M&A capability would allow firms to better choose their targets and conduct a superior integration process, which could prevent distressing mergers, unnecessary negative social impacts and culture disruption. As a result, the ensuing organization would be stronger, and the long-term performance would improve.

Originality/value

This study addresses gaps in the literature on M&A performance and provides a new empirical method to measure the M&A capability.

Keywords

Citation

Vinocur, E., Kiymaz, H. and Loughry, M.L. (2023), "M&A capability and long-term firm performance: a strategic management perspective", Journal of Strategy and Management, Vol. 16 No. 2, pp. 211-234. https://doi.org/10.1108/JSMA-10-2021-0204

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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