Organisational slack and post-merger performance: evidence from domestic and international takeovers

Bamiatzi, Vasiliki (2016) Organisational slack and post-merger performance: evidence from domestic and international takeovers. In: Academy of International Business Annual Meeting 2016, 27-30 Jun 2016, New Orleans.

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Abstract

We focus on the role of organizational slack on post-merger performance of domestic and cross-border acquirers. By employing a comprehensive sample of 9,345 M&A deals by US firms during the period 1995-2014,
we examine the impact of different types of organizational slack - unabsorbed, absorbed, high and low
discretion slack - on the acquirers’ post acquisition performance. We find that on average acquisitions lead to
the destruction of significant value for the bidder. However, organizational slack that is not readily available, may aggravate the negative effects of a takeover, leading to further losses in market value. On the contrary, readily available slack, in particularly the abundance of cash reserves, mitigates the challenges associated with a large corporate takeover and acts as a defense mechanism against acquirers’ losses. The above influences of organizational slack on post-merger performance are amplified in the case of international acquisitions. Therefore organizational slack is not only an important motivator for international activities as suggested in the past, but may also act as a facilitator for the success of cross-border investment decisions.

Item Type: Conference or Workshop Item (Paper)
Schools and Departments: University of Sussex Business School > Business and Management
Depositing User: Vasiliki Bamiatzi
Date Deposited: 25 Oct 2019 16:52
Last Modified: 25 Oct 2019 16:52
URI: http://sro.sussex.ac.uk/id/eprint/87412
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