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Organizational Spillovers of Divestiture Activity to M&A Decision-Making

Advances in Mergers and Acquisitions

ISBN: 978-1-78350-970-6

ISSN: 1479-361X

Publication date: 19 September 2014

Abstract

This paper investigates the relationship between divestiture activity and subsequent acquisition deal-making. We argue that the divestiture activity of firms influences their acquisition behavior through corporate restructuring learning effects and enhanced strategic flexibility. These organizational spillovers affect not only the degree of risk acquirers are ready to take but also their ability to effectively negotiate with the target firm. We test the existence of organizational spillovers for an international sample of 4,795 acquirers for the period 1990–2008 and get support for our theoretical predictions.

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Acknowledgements

Acknowledgments

The authors thank Egor Krivosheya, Denis Derushkin, and David Yeomans for their research assistance and gratefully acknowledge the support of the International Laboratory of Financial Economics and the Basic Research Program of the National Research University Higher School of Economics.

Citation

Bertrand, O., Betschinger, M.-A. and Petrina, Y. (2014), "Organizational Spillovers of Divestiture Activity to M&A Decision-Making", Advances in Mergers and Acquisitions (Advances in Mergers & Acquisitions, Vol. 13), Emerald Group Publishing Limited, Bingley, pp. 65-83. https://doi.org/10.1108/S1479-361X20140000013003

Publisher

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Emerald Group Publishing Limited

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