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This paper reviews the evolving literature on top management team effects in mergers and acquisitions (M&As). Existing research has focused on understanding why incumbent top managers depart at higher rates than normal following an acquisition and why high turnover rates have negative postacquisition performance effects. We explore two new areas of inquiry. First, we discuss the role of newly hired executives – executives hired after the acquisition. Our research indicates that executives who join target companies after an acquisition also depart more quickly than executives who join companies not previously involved in an acquisition. Acquisitions appear to create long-term instability in the target firm’s top management team – both incumbent and new-hire executives depart at higher rates than normal well into the future. Integration of the target firm often intensifies instability within the target company’s top management team. This instability affects performance and leads to further integration efforts as the firm attempts to improve performance. These additional integration activities, in turn, lead to even higher subsequent executive turnover. Second, we examine the topic of director turnover and propose a theoretical framework for understanding the relationship between acquisitions and director retention. Future research that considers the role of directors as well as executives may lead to deeper insight into the nature of turnover and integration effects in mergers and acquisitions.

The article aims to investigate the effects of ownership and capital structure on postacquisition operating performance.

The article extends the ongoing literature from an operating loss perspective and provides empirical evidence on the probability of acquirers’ operating loss in relation to ownership and capital structure. The operating performance of publicly listed manufacturing firms in China was tracked up to five years since the completion of the mergers and acquisitions (M&A) during 2003–2014.

The empirical results show that, in a five-year postacquisition period, state-owned enterprises (SOEs) are more likely to experience operating loss than non-SOEs. The likelihood of the operating loss is negatively associated with ownership concentration, implying that concentrated ownership may serve as an effective corporate governance mechanism in the emerging economy and improve postacquisition performance. The rise in leverage increases the likelihood of postacquisition operating loss, indicating that the costs of debt may outweigh the benefits.

The findings contribute to the literature on ownership, debt governance and post-M&A performance from an emerging economy perspective.

In this study, the authors argue that there is more than meets the eye on the effects over postacquisition performance and diversification. This study aims to propose that the conditions that allow higher returns are dependent on the institutional context. The authors suggest that diversification strategies differ in their impact on postacquisition performance when moderated by the institutional inefficiencies of economies.

This research is based on a quantitative approach. The authors statistically test the hypotheses based on multiple regression analysis.

Results show a negative moderating effect of the institutional inefficiencies of the target country on the relationship between the diversification decisions of the firm and its postacquisition performance. So that Latin American firms that perform Cross-border acquisitions with higher degrees of diversification are related to worse performance. However, the degree of institutional inefficiencies negatively moderates this relation, attenuating the negative effects of diversification over performance.

Although past research has shown that economies with high institutional inefficiencies can benefit from higher levels of diversification, no study has considered the impact of the institutional inefficiencies when discussing many economies, to authors’ acknowledgment. The authors provide evidence that, in the case of Latin American firms, diversification reduces performance; however, the degree of institutional inefficiencies negatively moderates this relation.

Neste estudo, argumentamos que há mais do que aparenta sobre os efeitos sobre o desempenho e a diversificação pós-aquisição. Propomos que as condições que permitem maiores retornos dependem do contexto institucional. Sugerimos que as estratégias de diversificação diferem em seu impacto no desempenho pós-aquisição quando moderadas pelas ineficiências institucionais dos países.

Esta pesquisa é baseada em uma abordagem quantitativa. Testamos estatisticamente as hipóteses com base na análise de regressão múltipla.

Os resultados mostram um efeito moderador negativo das ineficiências institucionais do país-alvo na relação entre as decisões de diversificação da empresa e seu desempenho pós-aquisição. Assim, firmas latino-americanas que realizam F&As com maior grau de diversificação estão relacionadas a pior desempenho. No entanto, o grau de ineficiências institucionais modera negativamente essa relação, atenuando os efeitos negativos da diversificação sobre o desempenho.

Embora pesquisas anteriores tenham mostrado que economias com altas ineficiências institucionais podem se beneficiar de níveis mais altos de diversificação, nenhum estudo considerou o impacto das ineficiências institucionais ao discutir diversos países. Fornecemos evidências de que, no caso das empresas latino-americanas, a diversificação reduz o desempenho, porém, o grau de ineficiências institucionais modera negativamente essa relação.

En este estudio, argumentamos que hay más en los efectos sobre el desempeño posterior a la adquisición y la diversificación de lo que parece. Proponemos que las condiciones que permiten mayores rendimientos dependen del contexto institucional. Sugerimos que las estrategias de diversificación difieren en su impacto sobre el desempeño posterior a la adquisición cuando se ven atenuadas por las ineficiencias institucionales del país.

Esta investigación se basa en un enfoque cuantitativo. Probamos estadísticamente las hipótesis con base en análisis de regresión múltiple.

Los resultados muestran un efecto moderador negativo de las ineficiencias institucionales en el país objetivo sobre la relación entre las decisiones de diversificación de una empresa y su desempeño posterior a la adquisición. Así, las firmas latinoamericanas que realizan M&A con un mayor grado de diversificación se relacionan con un peor desempeño. Sin embargo, el grado de ineficiencias institucionales modera negativamente esta relación, atenuando los efectos negativos de la diversificación sobre el desempeño.

Investigaciones anteriores han demostrado que las economías con altas ineficiencias institucionales pueden beneficiarse de niveles más altos de diversificación, ningún estudio ha considerado el impacto de las ineficiencias institucionales cuando se analiza de varios países. Proporcionamos evidencia de que, en el caso de las empresas latinoamericanas, la diversificación reduce el desempeño, pero el grado de ineficiencias institucionales modera negativamente esta relación.

This study aims to explore how the absorptive capacity of emerging market multinationals (EMNEs) facilitates increased acquirer performance in industry exploration and technology exploration cross-border acquisitions (CBAs).

The research context for this study is Brazilian EMNEs and their CBAs. The final database contains 101 CBAs.

The authors find that industry exploration strategies negatively affect financial performance, but technology exploration strategies have a positive effect. The acquirer’s absorptive capacity can exacerbate the negative effects, except in instances of technology exploration strategies, where there is a demonstrable benefit from the acquirer’s absorptive capacity.

The study contributes first by providing a more nuanced understanding of the effects of absorptive capacity on postacquisition performance, depending on the type of knowledge explored. Second, by drawing on EMNE learning perspectives, the authors demonstrate the versatility of absorptive capacity in emerging markets.

The purpose of this paper is to examine the role of diversity management on postmergers and acquisitions (M&A) performance. Building on prior literature, it investigates whether a firm ability to harmonize people with different backgrounds and to deal with uncertainty and dynamics in the diverse work environment will affect post-M&A performance either directly or through its interactions with acquirer-target characteristics.

This paper used panel regression analysis on a sample of 218 M&As conducted by listed large US firms across industries.

Results show that the diversity management of an acquiring firm positively influences post-M&A performance. This paper also finds support for diversity management having a more significant moderating role where merged firms have a bigger size difference and higher industry relatedness.

The primary contribution of this study is in testing and finding evidence to support the claim that diversity management is a useful factor in predicting post-M&A performance. The success of post-M&A integration should be considered alongside the extent of firm capabilities to manage internal diversity.

In a contribution to the emerging research examining Chinese cross-border acquisitions (CBAs), the authors observe experiential learning applications for enhancing M&A completions. By emphasizing knowledge transfer, the authors reveal how target-to-target industry similarity and bidder-to-target cultural distance affect learning outcomes.

Using a binary logistic regression model, the authors examine a sample of CBA attempts announced by Chinese companies from January 2002 to December 2012 to identify the variables that affect the completion of CBAs.

The authors find that foreign acquisition experience but not domestic acquisition experience enhances subsequent acquisition attempts, especially when prior and focal target companies share the dominant industrial logic. Learning transfer is negatively affected when target countries are more culturally distant from China, but learning benefits appear to increase under strong bidder-to-target cultural distance.

By investigating learning in the precompletion stage in Chinese outward CBAs, the authors complement research that uses postacquisition performance to assess learning. The authors’ more fine-grained characterization reveals that acquisition experience increases knowledge transfer through experiential learning. Furthermore, the authors show that dominant industrial logic and cultural distance are underexplored contextual conditions, although they interact with foreign and domestic experience to affect the completion of CBAs.

Mergers and acquisitions (M&As) have become an increasingly broad-based phenomenon, and their numbers are growing dramatically in the United States, Europe, and elsewhere throughout the globe. Still, research shows us that less than 50% of M&As succeed. At the same time scholarly research on M&As abounds, presenting the opportunity to step back and review what we have learned and what we still do not know. Although the field of M&A research is far too broad and complex to be covered in one review essay, we attempt to begin at the beginning, covering some historical and background issues before surveying three topics fundamental to successful M&As. First, in order to lay the foundations for better understanding of M&A processes in general, we overview various approaches from those that include just two phases – premerger and postmerger – to those with seven phases – including aspects of due diligence and integration phases. The second topic refers to M&A motives such as entering a new market, gaining new scarce resources, achieving synergies, and so forth. The third issue is M&A success factors. Here we synthesize a large body of research that has pointed to many different managerial and organizational factors that are generally associated with M&A success, for example, relative size of M&A partners, managerial involvement, culture, and organizational structural issues. While no review of these topics can claim to be comprehensive, we do attempt to present a good variety of literature approaches representing not only elite scholarly journals but also some important practitioner-oriented books and articles.

Drawing on the trust literature and research on sociocultural integration in mergers and acquisitions (M&As), we develop a model of the antecedents and consequences of trust dynamics in acquisitions. The model proposes that target firm members’ perceptions of the acquiring firm management's trustworthiness are affected by the relationship history of the firms, the interfirm distance, and the integration approach taken by the acquirer. Ability, benevolence, integrity, and value congruence perceptions are proposed to converge into a generalized trust judgment or result in a state of ambivalence, depending on whether the trustworthiness attributions are consistent or conflicting. The model explains the mechanisms by which trust and ambivalence may affect a variety of attitudinal and behavioral outcomes. A number of testable propositions are derived from this model, and the implications for M&A research and practice are discussed.

Each year, U.S. corporations invest billions of dollars in mergers and acquisitions. Unfortunately, the resulting combinations all too often fail to produce the benefits envisioned by management. As a consequence, few corporations are able to boast an unblemished string of successful acquisitions. This article provides an overview of measures that can be taken to better assure the success of such transactions.

This chapter presents a review of the state-of-the-art in the employee perspective on mergers and acquisitions (M&As). The authors’ aim is to enhance the understanding of the role of employees in M&As. This chapter contributes by presenting a synthesis of how the employee perspective has been studied by describing the methods, the context (industry and geographic location), and publication outlets. Furthermore, this chapter contributes by synthesizing the employee perspective literature into five distinct research streams: (1) employee reactions; (2) culture; (3) communication; (4) knowledge; and (5) speed. The authors reflect on the main findings of each stream and conclude by proposing future directions for research on the role of employees in M&As to (re)generate interest in the topic.