Management and takeover decisions

Delis, M. D., Kazakis, P. and Zopounidis, C. (2023) Management and takeover decisions. European Journal of Operational Research, 304(3), pp. 1256-1268. (doi: 10.1016/j.ejor.2022.05.005)

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Firms with good management optimize and synthesize human resources, leadership, and technical and conceptual skills to enhance firm value. In this paper, we examine the role of management in merger and acquisition (M&A) decisions. M&A decisions are among the most important corporate decisions, on which firms spend a lot of resources and managerial qualities. We estimate management as a latent variable using a structural equation production model and Bayesian techniques. The key advantage of the Bayesian approach is the use of informative priors from survey-based management estimation methods, which are however available for a limited number of firms. Subsequently, we examine the effect of management on takeover events. We first show that management, on average, increases the probability of M&A deals. However, we also uncover a nonlinear U-shaped effect, which is consistent with the theoretical premise that poor management leads to many value-decreasing M&A deals, whereas good management leads to many value-increasing M&A deals.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Kazakis, Dr Pantelis
Authors: Delis, M. D., Kazakis, P., and Zopounidis, C.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:European Journal of Operational Research
ISSN (Online):1872-6860
Published Online:08 May 2022
Copyright Holders:Copyright © 2022 Elsevier B.V.
First Published:First published in European Journal of Operational Research 304(3): 1256-1268
Publisher Policy:Reproduced in accordance with the publisher copyright policy

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