Bandwagon mergers, international competitiveness, and government policy

Schenk, Hans

doi:10.1007/bf00924973

Cited by 13 publications

(6 citation statements)

References 41 publications

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“…We investigate the step that precedes imitation, identifying motives that make agents imitate. Our formal model is based on, and extends, an earlier minimax-regret argument of Schenk (1996). This argument captures the managerial behavior underlying seemingly irrational M&A decisions by putting a floor under how bad a decisionmaker would feel if things go wrong.…”

Section: Introductionmentioning

confidence: 93%

Organizational decision-maker bias supports merger wave formation: demonstration with logical formalization

Péli

Schenk

2014

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Imitation of firms that opt for strategic reorganizations by opting for mergers and acquisitions facilitates market wave formation. Empirical evidence on mergers and acquisitions suggests that, under uncertainty, firms regret more not following their rivals' merger moves of yet unknown outcome than possibly failing jointly by copying them. Looking for the rationale for this bandwagon behavior, we explore the underlying decision-making framework by using formal logic and search for behavioral premises consistent with the observed outcomes. We point out three biased expectations, modeled by using a belief modal operator, that filter out relevant scenarios from the consideration set of otherwise rationally behaving decision-makers. The theorems derived from the logic model highlight the drive to imitate competitors' merger choices for all but one of the eight possible outcomes of the decision-making framework. For the latter case, a boundary condition is given that makes imitation the predicted strategy. Our approach goes against the view that human behavior defies logic-based rendering also if such behavior can be adequately described as non-rational in an economic sense. Logic is a flexible representation tool to model even faulty behavior patterns in a transparent way; it can also help exploring the consequences of the cognitive mistakes made. Our findings suggest that threats to wealth creation may not necessarily find their origins in morally questionable organizational behavior, but rather in modalities of decision-making under uncertainty.

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Section: Introductionmentioning

confidence: 93%

Organizational decision-maker bias supports merger wave formation: demonstration with logical formalization

Péli

Schenk

2014

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“…Research on mergers and acquisitions repeatedly uncovers the disappointing wealth and innovation effects of corporate concentration (Lubatkin 1983;Ravenscraft and Scherer, 1987;Schenk 2002). The fact that mergers and acquisitions tend to come in waves at the very least suggests that a satisfactory explanation of the phenomenon requires the inclusion of predictor variables that do not cohere very well with rationality-based models of managerial decision making (Schenk 1996). (3) Seen from a longitudinal perspective, these two types of ownership transitions are certainly not mutually exclusive.…”

Section: Notesmentioning

confidence: 99%

Rethinking corporate restructuring

Heugens

Schenk

2004

Journal of Public Affairs

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University. He received his PhD in economics (summa cum laude) from the University of Nice-Sophia Antipolis. He has published over 70 scholarly articles and book chapters, has written several books, serves on several editorial boards and has been a consultant for numerous companies and several national governments. Frequently ranked as one of the most influential economists in the Netherlands, his research interests include mergers and acquisitions and competition policy. ABSTRACTA giant wave of corporate restructuring has rolled through the global corporate landscape ever since the early 1980s, and to date there are still no signs of it slowing down. Much of the restructuring took place under the banner of increasing corporate financial performance, but a significant by-product of the deep-rooted organisational change it involves is additional strain on the organisation's relationships with employees, communities, taxpayers, governments and other stakeholders. This commentary paper first assesses four qualitatively different types of corporate restructuring and the corresponding techno-rational explanations and justifications for their occurrence. Next, it demonstrates how these restructuring transactions can frustrate a firm's relationships with market and non-market parties. It then goes beyond the techno-rational perspective by discussing four types of public affairs instruments, and framing them as facilitating measures which companies can take to appease actors that have the potential to inhibit organisational restructuring efforts. The authors thus rethink corporate restructuring by focusing on the crucial role that public affairs activities can play in the management of the market and non-market pressures associated with the redesign of organisational structures and portfolios.

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“…Daarnaast blijken zij over het algemeen aan zelfoverschatting te lijden en daardoor eventuele synergievoordelen niet adequaat in te schatten (Roll, 1986). Schenk (1996) legt nadruk op het strategisch dilemma, waarbij concurrenten elkaar volgen in het overnamegedrag. Ondernemingen zuigen elkaar op deze wijze mee in een fusiegolf, want niet meedoen kan immers spijt tot gevolg hebben.…”

Section: Conclusieunclassified

Verbetert de operationele prestatie van ondernemingen als gevolg van een fusie of overname?

Keijsers¹,

Triest²

2004

MAB

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In dit artikel presenteren we de resultaten van een onderzoek naar veranderingen in de operationele prestaties van ondernemingen na een fusie of overname, teneinde het optreden van synergievoordelen te beoordelen. We gebruiken hiervoor een steekproef van veertien overnames van Nederlandse beursgenoteerde ondernemingen. De veranderingen in de operationele prestaties worden geanalyseerd aan de hand van een cashﬂowgebaseerd model, waarbij het cashﬂowrendement op de marktwaarde van de activa en op de netto-omzet vóór en ná het samengaan met elkaar worden vergeleken. De resultaten van dit onderzoek duiden niet op verbeteringen in de operationele prestaties na de fusie of overname.

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Bandwagon mergers, international competitiveness, and government policy

Abstract: Theory of mergers, competitiveness, competition policy, industrial policy, D81, F23, L21, L13, L40, L50, O38,

Cited by 13 publications

References 41 publications

Organizational decision-maker bias supports merger wave formation: demonstration with logical formalization

Organizational decision-maker bias supports merger wave formation: demonstration with logical formalization

Rethinking corporate restructuring

Verbetert de operationele prestatie van ondernemingen als gevolg van een fusie of overname?

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