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Managing risk in mergers and acquisitions activity: beyond ‘good’ and ‘bad’ management

Alnoor Bhimani (Department of Accounting, London School of Economics and Political Science, London, UK)
Mthuli Ncube (African Development Bank, Johannesburg, South Africa)
Prabhu Sivabalan (Department of Accounting, University of Technology, Sydney, Australia)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 2 February 2015

Abstract

Purpose

This paper aims to assess the impact of the presence/absence of risk management practices on the risk of merger and acquisition (M&A) failure.

Design/methodology/approach

An agency theoretic perspective is adopted, along with a mixed-methods approach to study managerial complexity beyond simply “good” and “bad”. The focus is on an agency conflicts.

Findings

The authors first present an integrated framework that classifies managerial behaviour and risk management, where M&A bids can become vehicles for maximising managerial benefits rather than shareholder value. The authors proceed to consider M&A activity that benefits both managers and shareholders in the presence of risk management strategies.

Research limitations/implications

The paper highlights the benefits of multiple paradigms and research paths that address dimensions captured by an agency theoretic perspective.

Practical implications

The authors regard this paper as having particular significance in that the global financial crisis has impacted M&A activities and objectives, shifting the employment and related risks faced by managers.

Originality/value

The paper suggests future research paths to advance the understanding of the complex behaviour of managers involved in M&A activities that go beyond the classification of “good” and “bad” managers.

Keywords

Acknowledgements

We acknowledge the detailed comments from and discussions with Lemma Senbet and Kjell Hausken, which have added value to our paper. We also gratefully thank the participants at the University of the Witwatersrand Business School Research seminar for their comments.

Citation

Bhimani, A., Ncube, M. and Sivabalan, P. (2015), "Managing risk in mergers and acquisitions activity: beyond ‘good’ and ‘bad’ management", Managerial Auditing Journal, Vol. 30 No. 2, pp. 160-175. https://doi.org/10.1108/MAJ-08-2014-1079

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited