Acquisitions: evidence of behavioral decision making from the North American oil and gas industry
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AbstractThis dissertation aims to empirically investigate the behavioral determinants of corporate acquisitions in the North American upstream oil and gas acquiring companies. The core question underlying the study is: Do key concepts within the behavioral theory of the firm predict corporate acquisitions? This dissertation consists of three inter-related studies. The first study examined the impact of the survival and aspiration reference points on corporate acquisitions from the shifting focus perspective. The results showed that organizational acquisition strategy can be explained by organizational antecedents such as performance feedback and organizational slack. Underperforming companies decreased acquisitions as they approached the survival level, while medium and high performing organizations decreased acquisitions when their performance increased. The second study tested the effects of the interactions between organizational performance and slack on firm acquisition strategy. Overall, I found firm relative performance to the survival level is a strong predictor of organizational acquisition strategy. While lower performing companies increased acquisitions as their performance improved, higher performing companies with high slack resources decreased acquisition strategy as their performance increased. The findings clarified the high performance- high slack paradox. The results showed that companies with high performance and high slack resources decreased their acquisitions. Moreover, the results indicate that organizations with higher potential slack and prior acquisition experience are less likely to choose the acquisition strategy. Finally, the third study examined why and how managers decide between related and unrelated acquisitions. Specifically, I focused on the time horizon of firm performance and showed that long- term performance might better explain a firm's acquisition strategy. Overall, there was a positive relationship between poor long-term performance and future related acquisition. The results showed that, due to the risky nature of acquisition strategy, managers in long-term high performing companies are less likely to choose acquisition because this strategy may negatively affect firm performance. The results also showed that while potential slack positively impacted related acquisition, recoverable slack negatively affected acquisition. Firm's acquisition experience is also an important predictor of related acquisition.
Bibliography: p. 118-135