Management practices and M&A success

Delis, M. D., Iosifidi, M., Kazakis, P. , Ongena, S. and Tsionas, M. G. (2022) Management practices and M&A success. Journal of Banking and Finance, 134, 106355. (doi: 10.1016/j.jbankfin.2021.106355)

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.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Kazakis, Dr Pantelis
• Authors: Delis, M. D., Iosifidi, M., Kazakis, P., Ongena, S., and Tsionas, M. G.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: Journal of Banking and Finance
• Publisher: Elsevier
• ISSN: 0378-4266
• ISSN (Online): 1872-6372
• Published Online: 08 November 2021
• Copyright Holders: Copyright © 2021 The Authors
• First Published: First published in Journal of Banking and Finance 124: 106355
• Publisher Policy: Reproduced under a Creative Commons License