The influence of rhythm and frequency of M&A activities on the stock market response
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2021-08-19
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en
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Abstract
The generality of mergers and acquisitions (M&As) has been evinced to underperform, leading to a profound amount of theoretical and empirical work on this subject matter. Multiple scholars have elucidated the phenomenon of M&A prosperity, evaluating primarily single elements as the key to success. Strategic management literature calls for an integrative perspective and a holistic perception of the performance of M&A activities. Building upon recent literature encompassing a temporal perspective, this research examines the influence of rhythm and frequency of M&A activities on the stock market response in the energy sector. The scope of this analysis is extended to both pre- and post-merger success factors, including the motive behind M&A activities and post-merger integration. The hypotheses are tested by investigating 75 firms, performing 365 mergers or acquisitions over the last decade. Consistent evidence is found that rhythm influences the stock market response. More specifically, the results show that stakeholders respond more positively to a low-variability rhythm compared to a high-variability rhythm. The core contribution to strategic management literature is the insight into the occurrence of rhythm and frequency, and the market response to their announcement. Furthermore, this research contributes to emerging literature that assesses signaling theory as a theoretical lens by showing that not only the ‘why’ and ‘where’ of the acquisition matters, but the ‘when’ is equally crucial.
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Faculteit der Managementwetenschappen