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@PHDTHESIS{Ghufran:808596,
author = {Ghufran, Bushra},
othercontributors = {Breuer, Wolfgang and Salzmann, Astrid Juliane},
title = {{T}he role of behavioral factors in the success of mergers
and acquisitions},
school = {Rheinisch-Westfälische Technische Hochschule Aachen},
type = {Dissertation},
address = {Aachen},
reportid = {RWTH-2020-12171},
pages = {1 Online-Ressource (x, 234 Seiten) : Illustrationen},
year = {2020},
note = {Veröffentlicht auf dem Publikationsserver der RWTH Aachen
University 2021; Dissertation, Rheinisch-Westfälische
Technische Hochschule Aachen, 2020},
abstract = {Mergers and acquisitions $(M\&As)$ are carried out to be
competitive in the market and to grow rapidly by
capitalizing on some kind of synergies. However, many
mergers and acquisitions fail due to cultural
dissimilarities, agency problems, and integration issues. I
seek to add to the $M\&A-related$ literature in order to
create better comprehension of the underlying reasons of
frequent $M\&A$ failures, however, from a different
viewpoint by taking into account ‘behavioral’ element. I
strive to see through the investors’ and managers’
preferences to comprehend how their preferences affect
post-merger takeover performance in the long run. I begin
with investigating investors’ preferences with respect to
time, by employing cultural measure on long-term orientation
(LTO), and the role of these preferences in defining
takeover outcomes. By analyzing a large international sample
on $M\&A$ deals, I offer a strong empirical evidence that
investors’ time preferences have a considerable impact on
long-term takeover performance. I offer empirical evidence
that investors’ future orientation causes a significant
improvement in takeover returns, on the other hand
short-term orientation results in deteriorated takeover
outcomes. I further observe that the significance of
investors’ long-term orientation is stronger in countries
with higher level of investor protection and for domestic
deals with lower level of cultural disparities. Next, I use
national culture based characteristics of individualism,
uncertainty avoidance, and masculinity to investigate
managerial preferences and their likely impact on long-term
post-acquisition performance for the acquirers. There are
certain cultural characteristics that shape managerial
preferences and by doing so may cast a substantial influence
on takeover performance over an extended period. I analyze a
large international sample on takeover deals and conclude
that national culture has a significant impact of takeover
outcomes in a long run. I witness that the higher level of
individualism and uncertainty avoidance prevailing in the
country result in reduced level of post-acquisition risk,
suggesting the presence of managerial entrenchment that
ultimately reduces takeover returns. Masculinity is found to
have a positive impact on deal size, signifying the presence
of empire building, however, contrary to my expectations; it
does not cast any damaging impact on takeover outcomes. It
clearly suggests that the positive attributes connected with
masculinity (e.g. assertiveness, competitiveness, and
toughness) have more profound impact as compared to the
negative impact of empire building. I further observe that
my findings are stronger in the case of domestic deals and
for less globalized firms due to lower level of cultural
dissimilarities. Next, I analyze the use of positive and
negative language in financial disclosures and the ability
of such language to predict long-term gains to the
acquirers. In order to predict long-term takeover
performance, I apply textual analysis to the $MD\&A$ Section
of SEC filings (10-K Form) for $M\&A$ deals taking place in
the United States. My overall findings reveal that a
negative managerial tone has a strong negative association
with takeover performance, whereas a positive managerial
tone indicates managerial confidence in merger success, and
hence reflects an enhanced takeover performance over an
extended period. The evidence clearly rejects the hypothesis
that a positive managerial tone is interpreted as managerial
‘overconfidence’ in a merger’s success. My findings
also affirm that the predictive power of a negative tone is
far more pronounced than that of a positive tone and of any
other sentiment word lists. Moreover, stock returns do not
adjust to the textual description immediately due to
investors’ general inattentiveness and inability to
process subtle textual information more accurately. I also
observe that the significance of predictive power of a
negative managerial tone gains strength in the post-crisis
period and for cross-border and for riskier deals due to the
comparatively higher uncertainty associated with evaluating
such deals on the basis of ‘hard information’. Finally,
I investigate the usage of virtuous language in the
management discussion and analysis $(MD\&A)$ section of SEC
filings (10-K Form) and the prognostic power of such
language for takeover performance. The empirical results,
based on textual analysis, reveal that trust is negatively
associated with long-term takeover performance, suggesting
that managerial virtuous talk is, in practicality, an
indication of lower post-acquisition gains for the acquirers
in the long run. Furthermore, takeover returns are found to
reflect textual information on trust with a delay, owing to
general inattention and inability of investors to process
soft cues inherent in textual content and to managers
purposefully lulling investors to keep them from paying
attention and identifying managerial misconduct. Quite
interestingly, the significance of virtuous talk becomes
more evident in the post-crisis period due to relatively
higher uncertainty linked with evaluating such kind of deals
on the basis of hard information alone. Finally, an inflated
virtuous talk when coupled with pessimistic tone, the
ability of managerial ‘good talk’ to create a
trustworthy image and to distract investors reduces and the
predictive power of managerial trust talk increases even
more. Overall, it is concluded that managerial virtuous talk
should not be regarded as a ‘cheap talk’. It is, in
fact, very pertinent for predicting future takeover returns
in the long run.},
cin = {812610},
ddc = {330},
cid = {$I:(DE-82)812610_20140620$},
typ = {PUB:(DE-HGF)11},
doi = {10.18154/RWTH-2020-12171},
url = {https://publications.rwth-aachen.de/record/808596},
}
Gast ::