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Title: Empirical Evidence on Relationships between Ex AnteInnovation Pursuit and Post-M&A Performance in the Vietnamese M&A Industry, 2005-2012
Authors: Quan, Vuong Hoang
Napier, Nancy K.
Samson, Donaldine E.
Kong, Nguyen Hong
Keywords: Mergers and Acquisitions
Firm Performance
Conomic Transition
Human Capital
Financial Markets
Việt Nam
Abstract: This research aims to communicate new results of empirical investigations to learn about the relationship between determination of controlling an acquired firm’s capital, assets and brand versus its capability of innovation and ex post performance of the risingVietnamese M&A industry in the 2005-2012 period. The analysis employs a categorical data sample, consisting of 212 M&A cases reported by various information sources, and performs a number of logistic regressions with significant results as follows. -- Firstly, the overall relationship between pre-M&A pursuit’s determination on acquiring resources and performance of the post-M&A performance is found significant. There exist profound effects of a ‘size matters’ strategy in M&A ex post performance. When there is an overwhelming ‘resources acquiring’ strategy, the innovation factor’s explanatory power becomes negligible. -- Secondly, for negative performance of post-M&A operations, the emphasis on both capital base and asset size, and the brand value at the time of the M&A pursuit is the major explanation in the post-M&A period. Sodoes the absence of innovation as a goal in the pre-M&A period. These two insights together are useful in careful M&A planning. -- Lastly, expensive pre-M&A expenditures tend to adversely affect the post-M&A performance. -- As a general conclusion, this study shows that innovation can bean important factor to pursue in M&A transitions, together with the need to emphasize and find capable and willing human capital, rather than a capital base (equity or debt) and existing values of the acquired brands.
Appears in Collections:Economic development

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