Integrating Relative Standing and Market Discipline: A Complexity Theory Perspective of Post-Merger and Acquisition Executive Departure

Abstract

Mergers and acquisitions (M&As) typically accelerate target top management team (TMT) executive departures. Market discipline and Relative Standing are two major and competing economic and sociological explanations for this phenomenon which lack a satisfactory theoretical integration. To fill this gap in the literature, we model the M&A market as a complex adaptive system composed of TMTs which rid themselves of executives via self-organized critical processes, generating M&A market-level properties that are emergent, or not easily explained with reference to the individual TMTs. The observation of an emergent power law distribution in target TMT executive retention rates for M&A activities in the United States supports our interpretation.

Citation

Iriyama, A., Park, J.W., Supriyadi, F. and Yang, H. (2012), "Integrating Relative Standing and Market Discipline: A Complexity Theory Perspective of Post-Merger and Acquisition Executive Departure", Finkelstein, S. and Cooper, C.L. (Ed.) Advances in Mergers and Acquisitions (Advances in Mergers and Acquisitions, Vol. 11), Emerald Group Publishing Limited, Leeds, pp. 181-197. https://doi.org/10.1108/S1479-361X(2012)0000011012