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Can alliance substitute acquisition? the evidence from natural experiment

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Title: Can alliance substitute acquisition? the evidence from natural experiment
Authors: Lee, J
Lee, JM
Item Type: Journal Article
Abstract: We utilize a quasi-experimental setting that exogenously changes costs to acquire the targeted firm, which allows us to examine the relationship between the costs of acquisitions and decisions to pursue alliances. We find that firms with increased acquisition costs, due to the increased takeover protection, are more likely to experience alliances than their comparison group and that equity alliances are more likely to be adopted to substitute for acquisitions than non-equity alliances. Our post-hoc analyses also reveal that when the cost of acquisition increases, acquisitions indeed become less likely and that the sequential investment relationship of alliances and acquisitions becomes less likely. Finally, we show that following an increase in takeover protection, alliance performance decreases and acquisition premium increases.
Issue Date: 1-Aug-2021
Date of Acceptance: 1-Jul-2021
URI: http://hdl.handle.net/10044/1/91572
DOI: 10.5465/ambpp.2021.21
ISSN: 0065-0668
Publisher: Academy of Management
Start Page: 1
End Page: 6
Journal / Book Title: Academy of Management Proceedings
Volume: 2021
Issue: 1
Copyright Statement: © 2021 The Author(s)
Publication Status: Published
Open Access location: https://journals.aom.org/doi/abs/10.5465/AMBPP.2021.21
Online Publication Date: 2021-07-26
Appears in Collections:Imperial College Business School