The Influence of Acquisition Experience and Performance on Acquisition Behavior: Evidence From the U.S. Commercial Banking Industry

Abstract

We draw upon theories of organizational learning to examine acquisition likelihood in a sample of banking industry acquisitions from 1988 through 2001. Although research on organizational learning suggests that routines arising both from experience and from performance feedback guide organizational learning, the combined effect of these two sources of learning has rarely been examined. Findings are consistent with our theoretical predictions: (1) prior acquisition experience, (2) recent acquisition performance, and (3) the interaction between acquisition experience and recent acquisition performance are all positively related to the likelihood of subsequent acquisition.

Euphoria in financial markets: How Indian companies generate value in their cross-border acquisitions

“…This method is similar to extant literature which focuses on the short-term impact of acquisitions on acquirers (Cartwright and Schoenberg, 2006;Doukas and Kan, 2006;Gubbi et al, 2010;Kohli and Mann, 2012;Markides and Ittner, 1994;Moeller and Schlingemann, 2005). This ex ante performance measure prior to the actual integration of the target has been demonstrated to link well with the ex post firm level outcomes (Haleblian et al, 2006;Kale et al, 2002;Pangarkar and Lie, 2004). Moreover, this measure is relatively unbiased compared with other measures, and invariant to differences in national accounting standards (Cording et al, 2008;Gubbi et al, 2010).…”

“…Following Cakici et al (1996), Eun et al (1996) and Kang (1993), we calculate the relative strength of the exchange rate as the deviation of the foreign exchange rate at announcement date from its 12-month average. To control for foreign direct investment activity in India, we include a variable Inflow/Outflow which is the ratio of yearly inward investments to yearly outward investments from India (Buckley et al, 2012 We compute daily abnormal returns using a standard event study methodology (Cartwright and Schoenberg, 2006;Gubbi et al, 2010;Haleblian et al, 2006;McWilliams and Siegel, 1997;Moeller and Schlingemann, 2005). This methodology allows to test whether a specific event (the announcement of an acquisition) had a positive or negative impact on shareholder wealth (Aybar and Ficici, 2009).…”

Measuring efficiency of the banking industry before and after the recent financial crisis: some international evidence

“…Experienced executives may be more willing to acquire other firms because they have learned lessons from prior acquisitions (Haleblian, Kim et al 2006). However, executives approaching the end of their career become more risk averse and less likely to acquire as they realize that they may not necessarily be able to benefit from the acquisition's longer-term returns (Matta and Beamish 2008).…”

Essays on Corporate Reputation: Antecedents and Consequences

“…Acquirer industry also can influence expectations about future acquisition performance (Bergh, 1997). Industry characteristics such regulations, technology, and capital structure of businesses in an industry could influence attractiveness and expected success of acquisitions as a strategic choice (Haleblian et al, 2006). Particularly, businesses in financial industries have more resources (including capital resources) to undertake acquisitions.…”

“…Organizational routines are repetitive organizational activities that guide organizational decisions (Nelson & Winter, 1982). Firms gain expertise and competence in a routine by accumulating experience in it (Haleblian, Kim & Rajagopalan, 2006). Routines are important in acquisitions and specifically in integration processes where there is a high level of uncertainty.…”