When theory doesn't meet practice: Do firms really stage their investments?

Theory has often discussed the benefits of adopting a staged investment strategy in mergers and acquisitions when investments hold uncertain prospects. Specifically, firms should enter into a cooperative agreement, such as a strategic alliance, before they eventually decide to buy out a partner. In...

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Detalles Bibliográficos
Autores: Moschieri, Caterina, Ragozzino, Roberto
Tipo de recurso: artículo
Fecha de publicación:2013
País:España
Institución:IE
Repositorio:Repositorio IE
OAI Identifier:oai:repositorio.ie.edu:20.500.14417/3359
Acceso en línea:https://doi.org/10.5465/amp.2011.0110
https://hdl.handle.net/20.500.14417/3359
https://journals.aom.org/doi/10.5465/amp.2011.0110
Access Level:acceso abierto
Palabra clave:Investments
Strategic alliance
Mergers
Acquisitions
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spelling When theory doesn't meet practice: Do firms really stage their investments?Moschieri, CaterinaRagozzino, RobertoInvestmentsStrategic allianceMergersAcquisitionsTheory has often discussed the benefits of adopting a staged investment strategy in mergers and acquisitions when investments hold uncertain prospects. Specifically, firms should enter into a cooperative agreement, such as a strategic alliance, before they eventually decide to buy out a partner. In this paper, we first review the theoretical arguments supporting such an approach and then provide evidence showing that staged investments in mergers and acquisitions are far less frequent than theory predicts. We analyze a sample of 24,495 global transactions that occurred between 1995 and 2010 and find that firms stage mergers and acquisitions in only 1.26% of all deals. This figure changes little after we control for transaction- and environmental-level considerations. We propose several explanations of why staged investments are seldom used in practice, despite their theoretical properties.yesPublishedAcademy of ManagementPortuguese Foundation for Science and Technologyhttps://ror.org/02jjdwm75202420242013info:eu-repo/semantics/articleapplication/pdfapplication/pdfhttps://doi.org/10.5465/amp.2011.0110https://hdl.handle.net/20.500.14417/3359https://journals.aom.org/doi/10.5465/amp.2011.0110reponame:Repositorio IEinstname:IEInglésIE Business School#PTDC/ EGE-GES/110805/2009IE UniversityStrategyAttribution-NonCommercial-NoDerivatives 4.0 Internationalhttp://creativecommons.org/licenses/by-nc-nd/4.0/info:eu-repo/semantics/openAccessoai:repositorio.ie.edu:20.500.14417/33592026-06-15T12:40:57Z
dc.title.none.fl_str_mv When theory doesn't meet practice: Do firms really stage their investments?
title When theory doesn't meet practice: Do firms really stage their investments?
spellingShingle When theory doesn't meet practice: Do firms really stage their investments?
Moschieri, Caterina
Investments
Strategic alliance
Mergers
Acquisitions
title_short When theory doesn't meet practice: Do firms really stage their investments?
title_full When theory doesn't meet practice: Do firms really stage their investments?
title_fullStr When theory doesn't meet practice: Do firms really stage their investments?
title_full_unstemmed When theory doesn't meet practice: Do firms really stage their investments?
title_sort When theory doesn't meet practice: Do firms really stage their investments?
dc.creator.none.fl_str_mv Moschieri, Caterina
Ragozzino, Roberto
author Moschieri, Caterina
author_facet Moschieri, Caterina
Ragozzino, Roberto
author_role author
author2 Ragozzino, Roberto
author2_role author
dc.contributor.none.fl_str_mv Portuguese Foundation for Science and Technology
https://ror.org/02jjdwm75
dc.subject.none.fl_str_mv Investments
Strategic alliance
Mergers
Acquisitions
topic Investments
Strategic alliance
Mergers
Acquisitions
description Theory has often discussed the benefits of adopting a staged investment strategy in mergers and acquisitions when investments hold uncertain prospects. Specifically, firms should enter into a cooperative agreement, such as a strategic alliance, before they eventually decide to buy out a partner. In this paper, we first review the theoretical arguments supporting such an approach and then provide evidence showing that staged investments in mergers and acquisitions are far less frequent than theory predicts. We analyze a sample of 24,495 global transactions that occurred between 1995 and 2010 and find that firms stage mergers and acquisitions in only 1.26% of all deals. This figure changes little after we control for transaction- and environmental-level considerations. We propose several explanations of why staged investments are seldom used in practice, despite their theoretical properties.
publishDate 2013
dc.date.none.fl_str_mv 2013
2024
2024
dc.type.none.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv https://doi.org/10.5465/amp.2011.0110
https://hdl.handle.net/20.500.14417/3359
https://journals.aom.org/doi/10.5465/amp.2011.0110
url https://doi.org/10.5465/amp.2011.0110
https://hdl.handle.net/20.500.14417/3359
https://journals.aom.org/doi/10.5465/amp.2011.0110
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv IE Business School
#PTDC/ EGE-GES/110805/2009
IE University
Strategy
dc.rights.none.fl_str_mv Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/
info:eu-repo/semantics/openAccess
rights_invalid_str_mv Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
application/pdf
dc.publisher.none.fl_str_mv Academy of Management
publisher.none.fl_str_mv Academy of Management
dc.source.none.fl_str_mv reponame:Repositorio IE
instname:IE
instname_str IE
reponame_str Repositorio IE
collection Repositorio IE
repository.name.fl_str_mv
repository.mail.fl_str_mv
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score 15.811543

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