Dissertation
THE INTERDEPENDENT RELATIONSHIPS BETWEEN STRATEGIC ALLIANCES AND ACQUISITIONS: HOW ACQUIRER'S AND TARGET'S STRATEGIC ALLIANCES EXPERIENCE INFLUENCE ACQUISITION PERFORMANCE, ACQUISITION PREMIUMS AND POST-ACQUISITION PERFORMANCE
Doctor of Philosophy (PhD), Washington State University
01/2014
Handle:
https://hdl.handle.net/2376/117770
Abstract
This dissertation investigates the influence of interdependent relationships between strategic alliances and acquisitions on acquisitions outcomes and the impact of transcending relationships among investment banks on acquisitions premiums. The first essay examines the impact of acquirers' alliance experience on acquisition performance, measured as cumulative abnormal returns. We find that there exists an inverted U-shaped relationship between acquirers' alliance experience and acquisition performance, suggesting that prior alliance experience directly contributes to acquisition performance; however, the marginal benefit from the alliance experience to acquisition performance declines as acquirers' alliance experience increases. We also find a negative stock market response for acquirers with less alliance experience when they purchase target firms with a larger alliance portfolio. Overall, these results suggest that alliance experience helps acquirers develop organizational capabilities, and thus achieve better acquisition performance.
The second essay investigates the influence of acquirers' alliance experience on acquisition premiums and post-acquisition accounting performance. We find that acquirers with substantial alliance experience pay higher acquisition premiums; however, we observe that the same acquirers with significant alliance experience achieve no better post-acquisition performance. More interestingly, we find that the acquirers pay lower acquisition premiums and achieve higher post-acquisition performance when the acquirers purchase target firms that also possess great levels of size and diversity in their alliance portfolios. These results suggest that alliance experience helps acquirers garner organizational capabilities, and, thereby, better evaluate in pre-acquisition and better manage targets in post-acquisition.
While the first two essays focus on the interdependence between strategic alliances and acquisition outcomes, the third essay examines the impact of multiple agency conflict on acquisition premiums. We find that acquirers pay higher acquisition premiums when investment banks have significant transcending relationships. Additionally, we find that the same acquirers pay higher acquisition premiums when they have multiple transactions with the same banks and uncertainty concerning target valuation is high. Overall, these results suggest that the multiple agency conflict leads to overpayment for target firms and a bank's advantageous position vis-à-vis an acquirer further exacerbates such conflict of interests, inflating the amount of acquisition premiums paid by acquirers.
Metrics
8 File views/ downloads
15 Record Views
Details
- Title
- THE INTERDEPENDENT RELATIONSHIPS BETWEEN STRATEGIC ALLIANCES AND ACQUISITIONS: HOW ACQUIRER'S AND TARGET'S STRATEGIC ALLIANCES EXPERIENCE INFLUENCE ACQUISITION PERFORMANCE, ACQUISITION PREMIUMS AND POST-ACQUISITION PERFORMANCE
- Creators
- SAM YUL CHO
- Contributors
- Jonathan D Arthurs (Advisor)Arvin Sahaym (Committee Member)John B Cullen (Committee Member)
- Awarding Institution
- Washington State University
- Academic Unit
- Carson College of Business
- Theses and Dissertations
- Doctor of Philosophy (PhD), Washington State University
- Number of pages
- 108
- Identifiers
- 99900581536201842
- Language
- English
- Resource Type
- Dissertation