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"Left at the Altar? A Relational View of Merger and Acquistion Announcements in the 1990s"

Ruth V. Aguilera, John C. Dencker, and Xavier Escandell

 

First Author :

Ruth V. Aguilera
Business Administration
University of Illinois at Urbana-Champaign
1206 S. Sixth Street
M/C 706
Champaign, IL 61820
USA

(217) 333-7090

ruth-agu@uiuc.edu

http://www.business.uiuc.edu/faculty/aguilera.html


Second Author :

John C. Dencker
Institute of Labor and Industrial Relations
University of Illinois at Urbana-Champaign
504 E. Armory, Room 215 ILIR
Champaign, IL 61820
USA

(217) 333-2383

dencker@uiuc.edu

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Third Author :

Xavier Escandell
Sociology
University of Illinois at Urbana-Champaign
702 S. Wright St.
Urbana, IL 61801
USA

(217) 344-2178

escandel@ad.uiuc.edu

 
 
Abstract :
 
In this paper, we analyze data on the world’s largest merger and acquisition (M&A) announcements in the 1990s to explore the relational factors that determine their completion or withdrawal. Existing research on this little understood phenomenon in the M&A process typically focuses on the characteristics and actions of acquirer firms to understand financial and strategic M&A elements. We offer a new perspective by focusing on the dyadic relationship between acquirer and target firms. Controlling for strategic and financial factors, we find that the completion of an announced M&A is more likely to the extent that the relational capabilities stemming from country-level, industry-level and organizational-level factors generate a cooperative and trustworthy relationship. We conclude by discussing theoretical and managerial implications of our multi-level relational model.
 
 
JEL Classification : D21 , D23 , D74 , D81
 
 
Keywords :
 
acquisition, announcements, corporate governance, M&A, merger
 
 
Footnotes & Acknowledgements :
 
This is a revised version of Paper 04-0117. SSRN Web Address: http://ssrn.com/abstract=743886
 
 
Manuscript Received : 2005
Manuscript Published : 2005
 
 
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