 The effect of prior alliance experience on acquisition performanceShao-Chi Chang and Ming-Tse Tsai Applied Economics, 2013, vol. 45, issue 6, 765-773 Abstract: Information asymmetry usually results in acquiring a target where post-acquisition performance is often disappointing. In this study, we examine whether previous bidder--target alliances mitigate the negative effect of information asymmetry. Further, in cases when the target firms in an acquisition are from the high technology or service industries or privately held firms, whereby the firms are composed of unique knowledge, intangible assets and less disclosed information, respectively, we test whether there are significantly more acquisitions when prior bidder--target alliances exist, as it is assumed that these alliances reduce the level of information asymmetry. We find on average the post acquisition stock performance is better when the purchasing firm acquires a prior alliance partner. Furthermore, when acquiring privately held target firms, the target firms are more likely to be previous alliance partners. Finally, when the target firms are ‘more informed’ (i.e. high technology, service or privately held firms), the post acquisition performance is disappointing. However, bidder--target alliances reduce the amount of value destroyed. Date: 2013 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:45:y:2013:i:6:p:765-773 Ordering information: This journal article can be ordered from DOI: 10.1080/00036846.2011.613767 Access Statistics for this article Applied Economics is currently edited by Anita Phillips More articles in Applied Economics from Taylor & Francis Journals |
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