Session 114

The Interplay Between Financial Markets & Advisors and the Acquiring Firm

Track F

Date: Tuesday, October 6, 2015

 

Time: 17:30 – 18:45

Paper

Room: Governor's Square 10


Session Chair:

  • Gerry McNamara, Michigan State University

Title: Illuminating the Path: The Use of Foreshadowing as a Means of Anticipatory Impression Management for Acquisitions

Authors

  • John Busenbark, University of Georgia
  • Trevis Certo, Arizona State University
  • Donald Lange, Arizona State University

Abstract: Although top managers have reason to be concerned about how the stock market will react to new announcements of firm strategic moves, it is hard for them to influence these reactions. We contend that managers may engender more favorable stock market reactions by controlling the timing and content of the information releases. We examine a technique of anticipatory impression management we are calling foreshadowing. Foreshadowing consists of releasing vague information in advance of details regarding future strategic activity for events that may be negatively received. We develop arguments about how investors tend to perceive acquisitions negatively, and we then use a two-stage treatment effects model to show how foreshadowing will improve these reactions - especially when the firm has high information uncertainty.

Title: Predicting Financial Advisor Presence in Divesting Firms: An Organizational Learning Perspective

Authors

  • Shih-Chi Chiu, Nanyang Technological University
  • Seemantini Pathak, University of Missouri - St. Louis

Abstract: Financial advisors serve as the experts behind many firms’ restructuring process. Although the importance of financial advisors is widely recognized, we have little knowledge about why some divesting firms choose to retain an outside financial advisor while others use an in-house team to manage divestiture activities. The purpose of this study is to examine key organizational determinants of financial advisor presence in the divesting firms. We use the organizational learning perspective to explain how divestiture mode and prior divestiture experience impact firms’ engagement of a financial advisor. Our study contributes some building blocks toward a more comprehensive understanding of why divesting firms differ in their dependence on external financial intermediaries in the process of corporate divestiture.

Title: Ritual Rain Dancing?: A Longitudinal Examination of Serial Acquirers' Investor Relation Practices

Authors

  • Mylène Jeandupeux, University of St.Gallen
  • Xena Welch Guerra, University of St. Gallen
  • Tomi Laamanen, University of St. Gallen

Abstract: In this paper we examine how investor relation practices of acquisitive firms evolve as firms gain increasing acquisition experience. Based on the analysis of 9’950 press releases issued by 40 publicly listed serial acquirers, we find that firms’ investor relations units adapt their stock-market communication in two ways: First, they increase the number of press releases published 15 days prior to the acquisition announcement. Second, they increase the ratio of positive to negative words in acquisition announcement texts. Yet, despite these clearly detectable learning effects, there is no increase in cumulative abnormal returns on acquisition announcements. Our findings provide an important extension to behavioral learning theory by exemplifying a situation where firms develop increasingly sophisticated practices despite prompt and unambiguous performance feedback.

Title: When Do Investors React to CEO Equity Actions after Acquisition Announcements? A Value-Creation Uncertainty Explanation

Authors

  • Cynthia E Devers, Texas A&M University
  • Gerry McNamara, Michigan State University
  • Nicholas Roth, Chick-fil-A, Inc.
  • Adam Steinbach, University of South Carolina

Abstract: This study aims to extend our understanding of investors’ evaluations of acquisition value by arguing that investors respond to acquiring CEOs’ equity actions after acquisition announcements, a signal of CEOs’ confidence in the value-creating potential of their acquisitions. Furthermore, we argue that the degree to which investors focus on CEO equity actions is contingent upon value-creation uncertainty at the environmental, organizational, CEO, and deal levels. We aim to deepen our understanding of the relationship between CEOs’ actions and investor reactions and offer value-creation uncertainty as a mechanism to explain when investors are more likely to be influenced by CEOs’ behavior.

All Sessions in Track F...

Sun: 08:00 – 09:15
Session 193: Phenomenon-driven Research in Strategic Management
Sun: 09:45 – 11:00
Session 221: Reflecting on the scope of the firm: New avenues for future research
Sun: 11:15 – 12:30
Session 194: The State and Future of Disciplinary Research in Strategic Management
Sun: 16:15 – 17:30
Session 113: Serial Acquisitions: Strategies and Processes
Sun: 17:45 – 00:00
Session 314: Corporate Strategy Business Meeting
Mon: 08:00 – 09:15
Session 111: Portfolio Management: Diversification and Divestitures
Session 176: Different Perspectives Informing Governance Choices: Partner Choice in Alliances vs. Acquisitions
Mon: 11:15 – 12:30
Session 195: Where Are the Boundaries of Strategic Management Research?
Session 210: M&A/JV Implementation
Mon: 16:45 – 18:00
Session 112: Acquisitions - Before the Deal
Session 243: Competitive Dynamics and Market Positioning
Tue: 08:00 – 09:15
Session 115: Horizontal and Vertical Scope: Interactions and Embeddedness
Session 272: Competitive Dimensions of Firm Boundary and Location Decisions
Tue: 11:00 – 12:15
Session 117: Issues and Answers for the Diversified Firm
Session 145: Strategic Leadership and Corporate Strategy
Tue: 14:15 – 15:30
Session 58: Corporate VCs and spin-outs
Session 116: Acquisitions - After the Deal
Session 267: Healthcare Industry Dynamics, Relationships, and Activities
Tue: 15:45 – 17:00
Session 110: Models of Corporate Strategies
Tue: 17:30 – 18:45
Session 114: The Interplay Between Financial Markets & Advisors and the Acquiring Firm
Session 271: Spinouts


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