The Role of Business Ethics in Merger and Acquisition Success: An Empirical Study

Abstract

The purpose of this paper is to explore job performance, mergers and acquisitions (M&A) from an ethical perceptive. A great number of studies have extensively discussed the link between M&A and performance; however, most focused on the financial functions and strategy selections. Although ethical issues emerge in the M&A process, it is a less studied area. This study adopted the structural equation modeling approach to empirically test our hypotheses. Based on 264 samples from financial companies, data analyses indicated that ethical conduct in M&A is significantly correlated with employee job performance. Ensuring employment security and caring practices can significantly explain organizational commitment. Organizational commitment also plays a significant mediating role between a company’s ethical conduct and employee job performance. Managerial implications are also provided. Copyright Springer 2006mergers and acquisitions, business ethics, organizational commitment, job performance,

Green M&A Deals and Bidders’ Value Creation: The Role of Sustainability in Post-Acquisition Performance

“…Furthermore, a study of PwC (2012) provides additional support for this notion, finding evidence that CSR aspects of performance on the side of target firms largely affect the bidder's evaluation often leading to discounts in case of poor relative outcomes (Gomes & Marsat, 2017). Furthermore, Lin & Wei (2006) highlight a positive relationship between the target's sustainable efforts, in terms of job protection, justice and employees' security and post-acquisition performance. According to Godfrey (2005) and Godfrey et al (2009), the explanation may be that firms with stronger CSR practices are able to create a form of goodwill that reduces the severity of negative reactions in case of negative events, reducing the firm risk and preserving the firm value for shareholders, as postulated by the insurance-link effect theory.…”

“…how the new shift towards environmental responsibility affects M&A deals, since it is a relatively recent reality (Chan & Walter, 2014;Eisenbach et al, 2011;Lin & Wei, 2006;Yoo et al, 2011). The concept of business ethics has been studied in various fields of social sciences, as well as information management, marketing or human resources management but its impact on acquisition performance is still unclear among academics and practitioners.…”

“…We employ a measure of target sustainability to explore the impact it has on the bidder's performance post-acquisition, following Bettinazzi & Zollo (2017), who find support for the positive relationship between stakeholder orientation and acquisition success, and Lin & Wei (2006), who highlight the importance of business ethics issues in order to measure the acquisition's performance. Researchers agree that ROA is one of the most reliable proxies of profitability in this field of research (Cording et al, 2010;King et al, 2004;Papadakis & Thanos, 2010;Zollo & Meier, 2008).…”

10.5937/industrija42-5782 = Verizon acquired Vodafone: Analysis of market reaction

“…Objective 2: To establish similarities to previous theories/findings of merger and acquisition of telecom industry such as synergy trap hypothesis (MyeongCheol, et al, 2002), asset efficiency hypotheses (Salleh, et al, 2013); Barkema and Schijven, 2008), theories of impact on innovative performance of the acquiring firm in relation to knowledge base of acquired firm (Cloodt, et al, 2006), ethical conduct of mergers and acquisition and its impact on job performance (Lin and Wei, 2006), and share holders value effects (Rieck and Doan, 2009). In addition, objective is to compare analysis of similar recent deals (Singh, 2014).…”

“…(iv) Ethical conduct: Ethical conduct in M&A is significantly correlated with employee job performance (Lin and Wei, 2006;Lee et al, 2009). …”