Merged Research Articles

A practitioner's commentary on Louhiala-Salminen et al. (2005): Tackling BELF communication challenges in cross-border mergers and beyond

Based on the findings of English as a lingua franca in Nordic corporate mergers: Two case companies, speakers in international mergers who use BELF face communication challenges that result from two main sources. The first one is related to the speakers’ performance in English and includes language use and communicative practices. The second source refers to how speakers apply their sets of cultural values and beliefs in their discourse. By applying a framework of communication skills and coaching style activities the trainer can help learners develop a balanced discourse and build trust with their counterpart. These activities can further be applied in cultural transformation processes where speakers encounter similar challenges.

Commentary on Louhiala-Salminen et al. (2005): Launching the notion of BELF

Inspired by English as a Lingua Franca approach in linguistics, Louhiala-Salminen et al. (2005) introduced the notion of BELF (then called Business English Lingua Franca) in their article on internal communication between Finns and Swedes in two Nordic corporate mergers. It was a game changer in its approach to English as a professional tool getting the job done, while empowering internationally operating business practitioners and emancipating them from the role as failed native speakers. Using a mixed-methods approach with a survey and interviews on intercultural communication as well as meeting and email data enabled context-based findings on communicative practices: business was primary, linguistic correctness secondary. The notion of BELF has functioned as a springboard for empirical studies within (socio)linguistics, business/professional communication and even international management and has affected teaching and learning practices in various business schools. In the superdiverse business environment, avenues for further BELF studies are promising, exemplified by topics such as digitalized and virtual work contexts, developing business structures, translanguaging and multilingualism and ever more important issues of inclusion, diversity and power. Methodologies such as ethnography enabling close interaction with the everyday business practice are needed to understand where, why, and how interactions take place.

Love thy neighbor: CEO extraversion and corporate acquisitions

We investigate the relationship between CEO extraversion and the geographical dispersion of acquisitions within the U.S. The dispersion decision is important and has implications for employment, investments, and valuation. We show that extraverted CEOs prefer local deals and that the stock market favors local acquisitions made by extraverted CEOs. Our results support the notion that the extended and information-rich, local networks of extraverted CEOs as well as the agentic qualities of these CEOs facilitate the acquisition of local target firms. Our results are important in illuminating the channels through which extraverted CEOs make acquisitions and create value.

Digital Transformation, Manipulation of Asset Evaluation and M&A Performance: Discussion on the Intermediary Effect of Internal Control

Purpose - The purpose of this study was to examine the internal relevance between digital transformation, manipulation of asset evaluation and corporate M&A performance and further explores the impact path of manipulation of asset valuation on corporate M&A performance.
 Design/methodology/approach - This study based on the financial data of A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2013 to 2021.
 Findings - First, manipulation of asset evaluation is negatively correlated with M&A performance. Second, Digital transformation significantly weakens the negative correlation between manipulation of asset evaluation and corporate M&A performance. Third, The effectiveness of internal control plays a partially intermediary role in the process of manipulation of asset evaluation affecting M&A performance.
 Research implications or Originality - Enriching the existing literature on the subject, the study can also provide useful reference for improving the performance of corporate mergers and acquisitions, regulating asset valuation, promoting the digital transformation of enterprises and improving internal control mechanisms, with both theoretical and practical implications.

Человек эпохи перемен в контексте социально-экономической трансформации систем

The article is devoted to the current problem of preserving the human personality, man as a biosocial being in the context of the transformation of the socio-economic system. The purpose of the article is to identify the place and role of a person in a changing socio-economic system. In the course of the study, system analysis, deduction, induction, analogy, situational analysis and dialectics were used. It’s no secret that the measure of the development of the capitalist economic system is the monopolization of the economy, namely its concentration through the process of mergers and acquisitions of large national corporations, which is directly related to the circulation and the logic of capital itself. The insatiable thirst for the appropriation of someone else’s work on the part of the ruling class gives rise to infringement of a person’s freedom of choice and expression of his own thoughts. At one time, the outstanding Russian philosopher, logician and publicist Zinoviev A.A., contrasting capitalism and socialism, noted: “The Soviet system in its development is the pinnacle of history. The most perfect for domestic conditions.” Indeed, the Soviet Union was a major state in the world, which included 15 republics. All peoples worked closely together and economically interdependent on the principle of equality and common benefit for all. The Commonwealth has helped to achieve huge results. Science, technology, industry and agriculture were developing. It was under the Stalinist model of the economy that the idea of improving human life in all its manifestations was preserved, which cannot be said about the capitalist system, aimed only at exploiting man by man and the desire to increase his personal capital. This work is of scientific interest to a wide range of specialists and analysts. In addition, the information presented in the article can serve as a scientific basis for modeling and forecasting patterns, advantages and disadvantages of the development of the capitalist economic system within the historical paradigm.

The impact of government borrowing on corporate acquisitions: international evidence

This study examines how variation in government borrowing affects corporate acquisition activity around the world. Using a large sample of firms and deals from 50 countries between 1991 and 2017, the paper finds that government debt issuance is strongly negatively associated with acquisition activity at the firm and aggregate levels. An instrumental variable approach corroborates these findings, thus supporting their causal interpretation. In response to increases in government borrowing, firms appear to make more value-enhancing deals. These effects are stronger for cash-financed deals and for financially stronger firms. Collectively, these findings suggest that rising government debt leads to ‘real crowding out’ by affecting firms’ ability to make large investments.

Principles of Accounting Treatment for Corporate Acquisition and Concentration Test

Principles of Accounting Treatment for Corporate Acquisition and Concentration Test

Goodwill reporting in corporate acquisitions: The effects of managerial discretion under the new accounting rules

Goodwill is a critical issue in the accounting of corporate restructuring activities in terms of both purchase price allocation in corporate acquisitions and the subsequent write-downs. Although the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) new accounting standards provide a reference point for goodwill recognition, the complexity of fair value adjustments and the extensive subjectivity involved in assessing goodwill still make its allocation and the impairment-only approach limitedly transparent. Therefore, this study explores the impact of IFRS 3 (International Financial Reporting Standard 3) on management discretion in goodwill reporting. From a methodological standpoint, the hypotheses are tested on a sample of 68 acquisitions executed by Italian-listed acquirers in the 2012–2020 period. Our results confirm the potential for managerial opportunistic behavior in light of the signaling role of goodwill for investors.

Managing organizational change during a merger: The case of companies operating in the energy sector

Faced with changes in their environment, companies are obliged to constantly improve their competitiveness. This sometimes involves introducing organizational changes, which can take the form of mergers and acquisitions. However, many corporate mergers have failed, prompting researchers to investigate the causes. Researchers are increasingly focusing on the human factor as a determining factor in the success of these operations, and more specifically. Although, this research remains limited, on the importance of change management, which has a significant influence on the outcome of these operations, which are always in demand by companies. This research paper aims to identify the role of organizational change management in the success of mergers, using companies operating in the energy sector as a case study. We adopted an interpretivist stance based on an inductive qualitative approach, through semi-structured interviews. The content analysis revealed that organizational change is accompanied by resistance and integration difficulties. In this study, several factors promoting the change management are highlighted, which could be further enriched by analyzing change in other contexts.

The Value of Publicly Available Information on Acquired Firms in Corporate Acquisitions

The Value of Publicly Available Information on Acquired Firms in Corporate Acquisitions

Corporate Strategy Analysis in Increasing the Value of the Firm through Mergers and Acquisitions in the Banking Sector (Case Study on the BCA Group)

This study aims to determine the company's strategy based on after experiencing corporate mergers and acquisitions, considering the value of the firm and the company's financial ratios in the financial industry sector (a case study on the BCA Group). Quantitative research is carried out by analyzing Financial Statements one year before and one year after the merger and acquisition corporate action is carried out which has been audited from 2018 to 2020. Qualitative research is carried out by conducting interviews with Bank BCA Senior Employees (20 years experience at BCA) and employees of the BCA Syariah business unit. Technical analysis of quantitative data using SPSS software, technical analysis of qualitative data is carried out using the Strength-Weakness-Opportunity-Threat (SWOT) matrix. The results showed that the value of the firm experienced the highest value when the merger and acquisition corporate action was carried out in that year. Quantitative analysis of financial ratios before and after the corporate action was carried out did not show significant results. The corporate strategy recommendation based on a comprehensive analysis of the company's current conditions and conditions is to determine the strategy aggressively, this is due to internal strength factors and existing opportunities that are expected to be maximized by the company. This strategy is intended to support an aggressive growth policy, this may be done because the company has opportunities and strengths so that it can take advantage of existing opportunities.

Architectural Model and Formation of the Mechanism of the Concept of Management of Corporate Integration Processes

In today’s business environment, which is characterized by increasing competition and rapid changes, corporate integration is becoming a key strategic tool for enterprises to achieve success. The relevance of this scientific article lies in the comprehensive study of the architecture of construction and the sequence of formation of the mechanism of the concept of management of corporate integration processes. A detailed analysis of various aspects of management, which are critical for a successful combination of enterprises, is offered. Their research is based on theoretical concepts as well as on practical cases of corporate mergers. Among the key aspects under consideration are the formation of integration strategies, the development of effective management processes and the creation of control mechanisms. The importance of careful planning and implementation of these elements to ensure successful corporate integration is emphasized. The results of the study indicate the need for target orientation, transparency and effective communication between all parties of the corporate integration process. The scientific work is an important addition to the scientific understanding of the problems of managing corporate integration and can serve as a valuable source of knowledge for specialists in the field of management, consultants and scientists who are interested in this topic.

Inverroche: Maintaining brand equity in craft gin through brand acquisition

Subject area of the teaching case: It is well suited for short courses focussed on brand equity or marketing. Student level: This teaching case is specifically aimed at postgraduate students completing a management diploma or a professional development course. Brief overview of the teaching case: Inverroche, one of South Africa’s first artisianl gins, faces an interesting brand dilemma. By the end of 2016 through a distribution agreement with a large wholesaler, it secures a national footprint and becomes available at all leading retailers, resturants, and bars. The product’s immense growth trajectory attracts the attention of the global drinks conglomerates who see an opportunity to secure market share in the lucrative craft gin segment of the market. Founder Lorna Scott grapples with whether she has made the right choice to sell a majority share of her beloved brand to the global house of brands, Pernod Ricard. In this case, she meets with her sales team to debrief the situation as well as have a heart-to-heart with Alex Farnell, general manager of sales and marketing. The case looks at the Inverroche brand in detail, what it represents, and why it resonates so intrinsically with consumers. However, Scott and Farnell differ in opinion on the strategic objectives of the brand. Farnell seems to think that the sale to Pernod will not harm the brand, but Scott is torn. How does a niche artisinal brand scale? Can a brand remain authentic when it does scale? Is there any commercial sense in remaining artisinal? Is an artisinal brand’s brand equity compromised when it is sold to a corporate house of brands? All of these questions relate to whether a brand can remain authenthically artisinal amidst a corporate acquisition. Expected learning outcomes: To identify the challenges of growing an artisinal brand To identify the challenges of achieving scale as well as the marketing and commercial costs and profits scale represents To identify how to build a brand that resonates with consumers To critically assess the link between brand building, distribution, and availability To analyse the impact of brand architecture on brand equity

Does IT Matter to Acquisitions? The Impacts of IT Distance on Post-Acquisition Performance

Although researchers have examined the role of dyadic dynamics (i.e., interactions between the acquirer and the target firm) in the success of acquisitions, little attention has been devoted to the role of information technology (IT). In this study, we extend this literature by examining how pre-acquisition IT distance (i.e., the difference between the enterprise IT systems of the two firms that reflects the system incompatibility and resulting costs of system integration) affects the acquirer’s post-acquisition performance. To measure IT distance, we used a word-embedding technique to map each firm’s IT systems portfolio to a low-dimensional embedding space and calculate the distance between the firms in that space. Using data on U.S. firms’ acquisition activities over seven years, we found that IT distance is negatively associated with the acquirer’s post-acquisition performance. Also, the adverse effect of IT distance is stronger for acquisitions motivated by operational synergies, compared to those seeking non-operational synergies. This finding supports our fundamental premise that IT distance disrupts post-acquisition synergy creation, and more so when the combined firm has a greater need for tight integration to create acquisition synergies. This research contributes to the merger and acquisition (M&A) literature in management and IS by introducing a novel concept of IT distance and by theorizing and empirically examining its performance implications in acquisitions. The findings of this study can inform practitioners on how to devise IT strategies in corporate acquisitions to mitigate IT risks and achieve greater post-acquisition performance.

Resource redeployment in corporate acquisitions: Going beyond horizontal acquisitions

Resource redeployment between merging firms is an important way in which corporate acquisitions create value. Such redeployment can occur in horizontal deals when the acquirer and the target are from the same industry, or in non-horizontal deals when the acquirer and the target come from different industries. Although existing research focuses on the former scenario of resource deployment in horizontal acquisitions, resource deployment as a potential source of value in non-horizontal acquisitions has been understudied. This study uses a formal model to develop a theory of resource redeployment that both embraces and contrasts both types of acquisitions to offer new insights. The study concludes that the focus on horizontal acquisitions misses M&A contexts in which resource redeployment can create the highest value. Results from the model also demonstrate that acquisition performance has an inverse U-shaped relationship with relatedness between the merging firms. Finally, the effect of relatedness critically depends on the asymmetry in returns between the merging firms. These results are important for future empirical studies of acquisition performance and of target selection and are instructive to corporate managers seeking targets and managing potential redeployment of resources across organizations via M&A.

Does broadband infrastructure affect corporate mergers and acquisitions? Quasi-natural experimental evidence from China

This study investigates the relationship between broadband infrastructure and corporate M&A. Using the shock of “Broadband China” policy, we conduct difference-in-differences estimations and find that broadband infrastructure significantly increases corporate M&A, which remains robust after a series of robustness checks. Further analysis shows that the underlying mechanism is alleviating information asymmetry and increasing market competition. Finally, the heterogeneity analysis shows that our results are significant mainly in the group with high regional market segmentation, manufacturing industries, and non-state enterprises. Overall, this study enriches the research on the driving factors of M&A at the firm level and provides a micro-level evaluation of economic consequences of broadband infrastructure.

Knowledge problem diagnosis and the fate of corporate entrepreneurship initiatives

One of the great paradoxes of corporate entrepreneurship (CE) is that even with good intentions and prodigious resources initiatives supporting the renewal and revitalization of organizations through entrepreneurial action are often programmed to fail before they are even launched. The cause of this malady stems from the challenges corporate entrepreneurs face in accurately diagnosing the state of the marketplace and the needs of their respective companies. Misdiagnosis is costly, pervasive, and avoidable; yet, the entrepreneurship literature does not offer a comprehensive explanatory model concerning why and how these expensive errors arise with such frequency. To address this gap, we leverage recent advances in realm of knowledge problem scholarship to hone in on the ability and willingness of corporate entrepreneurs to accurately assess ambiguity, equivocality, uncertainty, and complexity in the context of corporate acquisitions. Findings from the study indicate that knowledge problem misdiagnosis has a profoundly negative impact on venturing outcomes. Practitioners exposed to the framework lauded its potential to constructively challenge core company assumptions to avoid expensive mistakes.

Corporate Mergers, Acquisitions and Value Creation of Firms in Nigeria

This study seeks to scrutinize the effect of corporate mergers, acquisition and value creation of firms in Nigeria and to identify areas of synergy. The study employed secondary data collected from the bank’s annual report. The data collected covered a period of fourteen years, which is divided into the pre and post-merger periods of seven years respectively. The study adopted panel least square estimation technique and other estimation for the analysis. The study finds out that shareholders’ funds and earnings per share are significant in determining the return on asset. Also shareholders’ funds and total asset values are statistically significant in the pre-merger periods in determining return on asset. That profit after tax is statistically significant in explaining financial efficiency in the pre-merger periods; the study concludes that there was increase in the shareholders’ funds for the post-merger periods.

Research on pricing and recycling decision of closed-loop supply chain under the mergers and acquisitions between competing manufacturers

Based on the increasingly popular practice background of corporate mergers and acquisitions (M&A), the feasibility of M&A strategy is studied in the closed-loop supply chain (CLSC) in combination with the different financial strength of competing manufacturers. By constructing a game model in CLSC under three modes of the decentralized decision-making with well-capitalized manufacturers, the decentralized decision-making with a capital-constrained manufacturers and the M&A between competing manufacturers, the paper analyzes the influence of bank loan interest rate and M&A coefficient on the optimal decision and revenue to calculate the conditions that competing manufacturers need to meet to implement the M&A strategy. It finds that: firstly, with the increase of bank loan interest rate, the capital-constrained manufacturers will increase the wholesale price to obtain higher returns, and meanwhile reduce the recycling rate of old products to reduce the capital investment, but the well-capitalized manufacturers will also lower wholesale prices, but they will increase the recycling rate of old products to reduce production costs. Secondly, with the increase in bank interest rates, the revenue of capital-constrained manufacturers decreases, while the well-capitalized manufacturers increase. Thirdly, when competing manufacturers can increase market power or improve core production technology to reduce costs after mergers and acquisitions, they will increase the recycling of old products and reduce the wholesale price of products to gain more market share. Moreover, the better performance of the M&A strategy, the higher the benefits of closed-loop supply chain members will be. Finally, whether manufacturers are capital constrained or not, the M&A strategy are not always beneficial to the manufacturers. And whether the M&A strategy is beneficial or not is related to market demand parameters, recovery cost parameters and merger coefficient. But when these parameters meet certain conditions, the competitive manufacturer’s M&A strategy can benefit all members of the closed-loop supply chain.

Superstition and Risk Taking: Evidence from “Zodiac Year” Beliefs in China

We show that superstitions—beliefs without scientific grounding—impact the investment and risk-taking of Chinese firms. We focus on widely held beliefs in bad luck during one’s “zodiac year,” which occurs on a 12-year cycle around a person’s birth year, to study superstitions and risk taking. We first show a direct correspondence between zodiac year and risk taking via survey data: respondents are two percentage points more likely to favor no-risk investments if queried during their zodiac year. Turning to corporate decision making, we find that return volatility declines in the chairman’s zodiac year, suggesting a reduction in risk taking overall. Focusing on specific types of risk taking, investment in R&D and corporate acquisitions both decline during the chairman’s zodiac year; returns around acquisition announcements are also lower, suggesting real allocative consequences of zodiac year beliefs. This paper was accepted by Gustavo Manso, finance. Funding: W. Huang thanks the Major Project of National Social Science Foundation of China [Grant 17ZDA090] and the “National Program for Special Support of Eminent Professions” for financial support. Y. Pan thanks the National Natural Science Foundation of China [Grant 71790601] for financial support. Y. Wang thanks the National Natural Science Foundation of China [Grant 72172090] for financial support. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.4594 .