Experience Spillovers across Corporate Development Activities
AbstractThis study develops a theoretical explanation for the existence of positive, as well as negative, experience spillovers across corporate development activities. We suggest that the similarity in two activities influences both the sign and magnitude of experience spillovers. The argument is used to understand how alliance experience influences the performance of acquisitions in the US commercial banking industry. The empirical evidence indicates that the spillover effect of alliance experience on acquisition performance is a function of the decisions made in the post-acquisition phase regarding the level of integration and the replacement of top management. We also find a U-shaped relationship between alliance experience and acquisition performance, suggesting the presence of negative spillovers across corporate development activities at low experience levels.
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Bibliographic InfoPaper provided by Wharton School Center for Financial Institutions, University of Pennsylvania in its series Center for Financial Institutions Working Papers with number 01-35.
Date of creation: Sep 2001
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-10-29 (All new papers)
- NEP-CFN-2001-11-01 (Corporate Finance)
- NEP-FIN-2001-10-29 (Finance)
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