Signaling strategic commitment for organizational transition: how to manage potential M&As through voluntary disclosures

Angwin, Duncan; Meadows, Maureen; Yakis-Douglas, Basak and Ahn, Kwangwon (2012). Signaling strategic commitment for organizational transition: how to manage potential M&As through voluntary disclosures. In: SMS 32nd Annual International Conference: Strategy in Transition, 6-9 Oct 2012, Prague, Czech Republic.

URL: http://prague.strategicmanagement.net/

Abstract

To ‘transit or not’ often depends upon winning over investor opinion to large strategic initiatives. M&A is one such major realignment of an organization and yet once a bid for a company has been announced there is a period of uncertainty when the bid may not be completed. This depends on share price movements determined more by investor perceptions than fundamental values. This paper investigates whether these perceptions may be influenced by ‘voluntary’ corporate communications and so link managerial practices to strategic outcomes. Drawing upon two very large M&A data sets (USA and UK) (57,000 deals; 30,000 communications) we argue managerial practice (signaling strategic commitment) shapes market response and demonstrate communication characteristics, and the use of high-reputation intermediaries, play an important role in determining share price reaction.

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