Management practices and M&A success

Manthos Delis (), Maria Iosifidi, Pantelis Kazakis, Steven Ongena and Mike Tsionas

Journal of Banking & Finance, 2022, vol. 134, issue C

Abstract: We study whether management practices determine merger and acquisition (M&A) success. We model management as an unobserved (latent) variable in a standard microeconomic model of the firm and derive firm-year management estimates. We validate these estimates against benchmark survey data on management practices and by using Monte Carlo simulation. We show that our measure is among the most important determinants of value creation in M&A deals, substantially increasing the predictive power of models that explain cumulative abnormal returns. Thus, we offer a measure of management practices that identifies the best-performing M&As. Our results are robust to the inclusion of acquirer fixed effects and many control variables, and to several other sensitivity tests. We identify the Q-theory as the key mechanism driving our results.

Keywords: Mergers and acquisitions; Management practices; Acquirer returns (search for similar items in EconPapers)
JEL-codes: G14 G34 J24 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:134:y:2022:i:c:s037842662100306x

DOI: 10.1016/j.jbankfin.2021.106355

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