Decision Making in Acquisitions: The Effect of Outside Directors’ Compensation on Acquisition Patterns

Deutsch, Yuval; Keil, Thomas; Laamanen, Tomi

doi:10.1177/0149206306296576

Cited by 77 publications

(73 citation statements)

References 152 publications

(199 reference statements)

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“…Upper echelons theory suggests that bounded rationality and other cognitive biases play important roles in many strategic decisions (Hambrick, 2007). In the context of mergers and acquisitions, acquiring firm leaders' 55 hubris (Hayward & Hambrick, 1997), narcissism (Chatterjee & Hambrick, 2007) and self-interest (e.g., Deutsch, Keil, & Laamanen, 2007;Gamache, McNamara, Mannor, & Johnson, 2014;Devers, McNamara, Haleblian, & Yoder, 2013) have been shown to influence decisions in the deal-making phase. Leaders' prior experience (e.g., Walters, Kroll, & Wright, 2008;McDonald et al, 2008), functional position (Melone, 1994), gender (e.g., Chen, Crossland, & Huang, 2014), tenure and educational background (Nadolska & Barkema, 2014) also influence decisions regarding whether to acquire a firm and how much to pay.…”

Section: Decision-makingmentioning

confidence: 99%

The Process of Postmerger Integration: A Review and Agenda for Future Research

Graebner¹,

Heimeriks

Huy

et al. 2017

ANNALS

279

354

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Mergers and acquisitions continue to be prevalent despite frequently yielding disappointing outcomes. Post-merger integration plays a critical role in M&A success, yet many questions about M&A implementation remain unanswered. In this article, we review research on post-merger integration, which we organize around strategic integration, sociocultural integration, and experience and learning. We then lay out a research agenda that centers on expanding our understanding of processual dynamics in post-merger integration. We focus on opportunities related to temporality; decision-making; practices and tools; and emotionality.

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Section: Decision-makingmentioning

confidence: 99%

The Process of Postmerger Integration: A Review and Agenda for Future Research

Graebner¹,

Heimeriks

Huy

et al. 2017

ANNALS

279

354

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show abstract

“…From an AT point of view, therefore, independent outside directors play an important role in shaping the strategic behavior of the firm (Deutsch, Keil, & Laamanen, 2007). However, outside directors' role in monitoring and providing strategic advice has not received strong support from empirical research, as it shows little effect on organizational functioning and firm performance (Daily, Certo, Dalton, & Roengpitya, 2003;Daily & Dalton, 1994;Dalton, Daily, Ellstrand, & Johnson, 1998).…”

Section: At Research On Monitoring and Risk Taking Because Incentivementioning

confidence: 99%

Managerial Risk Taking

Hoskisson

Chirico

Zyung³

et al. 2016

Journal of Management

256

132

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Managerial risk taking is a critical aspect of strategic management. To improve competitive advantage and performance, managers need to take risks, often in an uncertain environment. Formal economic assumptions of risk taking suggest that if the expected values for two strategies are similar but one is a greater gamble (uncertain), managers will choose the strategy with a more certain outcome. Based on these assumptions, agency theory assumes that top managers should be compensated or monitored to achieve better outcomes. We review the theory and research on agency theory and managerial risk taking along with theories that challenge this basic assumption about risk taking: the behavioral theory of the firm, prospect theory, the behavioral agency model and the related socioemotional wealth perspective, and upper echelons theory. We contribute to the literature by reviewing and suggesting research opportunities within and across these theories to develop a comprehensive research agenda on managerial risk taking.

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“…In addition, agency theory arguments have been used to explain strategic decisions such as diversification (Denis, Denis, & Sarin, 1999;Goranova, Alessandri, Brandes, & Dharwadkar, 2007;Kochhar, 1996;Markides & Singh, 1997;Matsusaka, 2001), corporate mergers (Reuer & Miller, 1997), and takeover defenses (Frankforter, Berman, & Jones, 2000). Other studies (e.g., Deutsch, Keil, & Laamanen, 2007;Reuer & Miller, 1997;Yoshikawa & Phan, 2005;Zahra, 1996) have used agency theory arguments to examine the relationships between governance mechanisms and firm behavior.…”

Section: Theoretical Perspectives In the Study Of Entry Mode Choicementioning

confidence: 99%

Board Characteristics, Managerial Incentives, and the Choice Between Foreign Acquisitions and International Joint Ventures

Datta

Musteen

Herrmann

2009

Journal of Management

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Drawing on the agency theory, corporate governance, and international business literatures, the authors link board characteristics and managerial incentives to the choice between acquisitions and joint ventures by firms entering foreign markets. Hypothesized relationships are examined in the context of 383 acquisition and 171 joint venture entries undertaken by relatively nondiversified firms in the U.S. manufacturing sector during the period 1991 to 1999. Findings indicate that firms with boards characterized by a higher proportion of outside directors and independent leadership structures (i.e., the absence of duality) are more inclined to favor acquisitions over joint ventures in foreign market entry. Likewise, the data reveal that firms where insiders have greater equity ownership and compensation structures that are more closely linked to long-term firm performance prefer acquisitions over joint ventures. Implications of the findings along with directions for future research are discussed.

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Decision Making in Acquisitions: The Effect of Outside Directors’ Compensation on Acquisition Patterns

Cited by 77 publications

References 152 publications

The Process of Postmerger Integration: A Review and Agenda for Future Research

The Process of Postmerger Integration: A Review and Agenda for Future Research

Managerial Risk Taking

Board Characteristics, Managerial Incentives, and the Choice Between Foreign Acquisitions and International Joint Ventures

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