ENTERPRISE SYSTEMS AND M&A OUTCOMES FOR ACQUIRERS AND TARGETS

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3 Scopus citations

Abstract

This study examines the impact of coordination capabilities provided by enterprise systems (ES), manifested in ES standardization and extensiveness, on merger and acquisition (M&A) outcomes in the short and long term. Specifically, we examine the extent to which the ES standardization and ES extensiveness of the acquiring and target firms contribute to value creation in M&A initiatives. We also study the relationship between the ES standardization and ES extensiveness of the acquiring and target firms and M&A offer premiums. The empirical analysis suggests that the ES standardization of acquirers is related to lower offer premiums and a higher market response to the acquisition for the acquirer. However, it is the ES extensiveness of the acquirer that improves long-term performance i.e., decreases goodwill impairment and increases operating performance. The analysis also indicates that the target’s ES standardization increases the premium for the target firm and generates a positive market response to the acquisition for the target firm. Overall, the analysis indicates that the ES standardization likely affects the integration cost that influences market response to the M&A and to the M&A premium in the short term, but it is ES extensiveness that affects the realized synergy from the M&A that affects long-term performance.

Original languageEnglish (US)
Pages (from-to)1295-1322
Number of pages28
JournalMIS Quarterly: Management Information Systems
Volume46
Issue number3
DOIs
StatePublished - Sep 2022
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2022 University of Minnesota. All rights reserved.

Keywords

  • cumulative abnormal return (CAR)
  • enterprise system (ES) extensiveness
  • enterprise system (ES) standardization
  • goodwill impairment
  • Mergers and acquisitions (M&As)
  • offer premium
  • operating performance

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