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Management as the sine qua non for M&A success

Delis, Manthos D and Iosifidi, Maria and Kazakis, Pantelis and Ongena, Steven (2018): Management as the sine qua non for M&A success.

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This paper studies the quality of management of acquiring firms as an important determinant of merger and acquisition (M&A) success. We model management practices as an unobserved (latent) variable in a standard microeconomic model of the firm and derive firm-year management estimates therefrom. We show that our measure is the most important determinant of value creation in M&A deals: a one-standard-deviation increase in the measure almost doubles cumulative abnormal returns. Our results are robust to the inclusion of acquirer fixed effects, to a large set of control variables, and to several other sensitivity tests.

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