Who violates expectations when? How firms' growth and dividend reputations affect investors' reactions to acquisitions

• 成果类型: Article
• 署名作者: Blagoeva, Radina R.; Kavusan, Korcan; Jansen, Justin J. P.
• 署名单位: University System of Georgia; University of Georgia; Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.3155
• 发表日期: 2020
• 页码: 1712-1742
• 关键词: acquisition announcements; expectancy violation theory; framing; INVESTOR REACTIONS; Mergers and Acquisitions; reputation

摘要

Research summary We investigate the role of a firm's dividend and growth reputations in shaping investors' interpretations of acquisitions as a negative or positive expectation violation. While our findings reveal that both an acquiring firm's dividend and growth reputations trigger positive investor reactions, they also show that investors react negatively to an acquisition of a target firm with a strong growth reputation when the acquiring firm has a strong dividend reputation. We also find that investors are inclined to give managers the benefit of the doubt to the extent that an acquiring firm strategically frames an acquisition announcement in such a way that it provides assurance to investors that the acquisition is meant to exceed investors' expectations about shareholder value creation. Managerial summary We study why investors respond to some acquisitions positively and others negatively. We find that the way acquiring and target firms have created shareholder value in the past, and the information conveyed in the acquisition announcements are important determinants of investors' differential reactions to acquisitions. Our findings show that while investors generally react positively to acquisitions by firms known for creating value either through dividends or growth, their reactions become negative when a firm known for value creation through dividends acquires a target known for value creation through growth. We further find that managers can favorably influence investor reactions by making it salient in the acquisition announcement how the acquisition is intended to exceed investors' value creation expectations from the acquiring firm.