Formular preguntas secundarias

The first question that anyone, scholar or practitioner, asks about mergers and

acquisitions is whether firms consistently create value from them. The predominant

evidence from studies o f stock price reactions shows no creation o f abnormal returns, on

average, from the perspective o f the acquiring company’s shareholders (Jensen &

Ruback, 1983; Franks, Harris & Titman, 1991; Loderer & Martin, 1992). Some studies

actually show a systematic value destruction from acquisition activities, which Agrawal,

Jaffe, and Mandelker (1992) quantify as 10% o f the acquirer’s market value over five

years.

The data gathered in the study are not exceptions to that empirical regularity.

Table 7.1 summarizes the means and the two-tailed t-tests o f the various performance

measures available at both the acquisition and the firm levels o f analysis.

Table 7.1 - Tests for the deviation from 0 of the mean of performance distributions

MEASURE Mean Std Dev N t- statistic P- value Acquisition Level

Ch. in ROA (3 yrs after) .0284 .7255 291 .669 .504

Ch. in ROA (2 yrs after) .0450 .6683 371 1.298 .195

Ch. in ROA (1 year after) -.0175 .4300 448 -.861 .390

Firm Level

Ch. in ROA (3 yrs after) -.0347 .4027 39 -.538 .594

Ch. in ROA (2 yrs after) -.0445 .2986 40 -.942 .352

Ch. in ROA (1 year after) -.0545 .2361 44 -1.531 .133

Ch. in ROA 1987-1996 -.0231 .5146 46 -.304 .763

Avg. ROA 1991-1996 .0170 .1826 46 .630 .532

ROA 1996 -.0263 .2662 44 -.655 .516

135

Though the signs vary with the level o f analysis and the particular time horizon

adopted, none o f the means shown is statistically distinguishable from zero. One

observation o f note involves the comparison o f the means o f the short-term changes in

ROA (two and three years after the acquisition) at the two levels o f analysis. The means

for the acquisition level are positive in sign, whereas those at the firm level, resulting

from the aggregation o f all the observations per firm, are negative. The explanation is

that the frequency o f M&A experience, which is irrelevant in the aggregated case where

every acquirer accounts for only one observation, improves the acquirer’s ROA and

therefore produces a higher (and positive) average at the acquisition level o f analysis.

The finding can be viewed as partial evidence that experience matters when firms

conduct acquisition activity.

Another hint from the economics and finance literature comes from some of the

most recent studies which have taken a longitudinal view o f the problem o f the location

of the mean o f the performance distribution. Schleifer and Vishny (1994), for example,

found a significant difference in the value-creation record between mergers in the 1960s

and those in the 1980s, with the latter seeming to outperform the former. Along similar

lines, Loderer and Martin (1992) found that “negative performance in the second and

third year after the acquisition is most prominent in the 1960s, and to a lesser extent in

the 1970s, but not in the 1980s” (p. 70). The explanation for acquisition under­

performance, then, may not be some inherent value-destruction quality o f mergers and

acquisitions, as implicitly suggested by the literature, but instead a general lack o f

capability to manage those activities, a capability that has been developing slowly at the

population level over the decades.

136

This study seems to provide initial support for that learning-based explanation o f

acquisitive behavior and performance. Shifting the attention from the average to the

variance o f the distribution o f acquisition performance, it focuses first on explanatory

variables related to the characteristics o f the two firms involved in the acquisitions. The

theoretical framework proposed in Chapter 4 (see Figure 4.3) then adds a second class o f

explanations, the types o f decisions made by the acquiring firm after completion o f the

acquisition (Haspeslagh & Jem ison, 1991; Shanley, 1994). The analyses show that

certain types of integration decisions systematically outperform others. An integration

strategy formed by the combination o f a high level o f integration and a low degree o f

replacement o f the key resources o f the target firm, or convergence (see Figures 4.2 and

7.2), should outperform all other approaches. One way to verify that effect in concrete

terms is by using the coefficients o f one o f the models estimated and computing the

variation o f the dependent variable for the various permutations offered by the two post­

acquisition integration decisions studied. Figure 7.2 reports the results o f such

computations in the case o f the coefficients estimated with the model showing the best fit

with the data, the one using the accumulation o f in-market acquisition experience (Table

6.11; the other experience trajectories yield qualitatively similar results). The value

codings for the explanatory variables follow.

• Integration was coded 3 (com plete) for high and 2 (partial) for low.

• Replacement was coded 3 (complete) for high and 0 (all retained) for low.

• All the other variables were entered at their mean values

The dependent variable was measured in terms o f the difference between the

ROA three years after the acquisition and the ROA one year before. Also, the two values

137

were computed as the difference between the acquirer’s ROA and the average ROA in its

geographic area. The entries in the table are the acquirer’s change in net earnings levels

(the product o f ROA with total assets) over four years, minus that o f its key competitors.

Fig. 7.2 - Value Creation and