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Executive perceptions in foreign and domestic acquisitions: an analysis of foreign ownership and its effect on executive fate

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  • Krug, Jeffrey A.
  • Nigh, Douglas

Abstract

Foreign acquisitions account for one in every six acquisitions in the United States and lead to a variety of positive and negative outcomes for executives in acquired U.S. companies. They often enhance career opportunities and enrich executives' international experiences but increase the chances of being replaced. Despite an increasing number of foreign acquisitions in the U.S.A. during the last twenty years, we still know very little about the differing perceptions of executives involved in foreign versus domestic acquisitions. A better understanding of such perceptions is important in light of the tendency of the popular press to focus on the negative aspects of foreign acquisitions of U.S. companies and landmarks. We present a framework for understanding executives' perceptions based on surveys and interviews with 284 executives and discuss five areas where executive perceptions differ: (1) cultural differences, (2) system changes in the acquired company, (3) acquisition negotiations, (4) executives' reasons for staying or leaving after the acquisition, and (5) postacquisition outcomes for the organization. Executives' perceptions differed significantly in each of these five areas depending on whether the executive was involved in a foreign or domestic acquisition.

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  • Krug, Jeffrey A. & Nigh, Douglas, 2001. "Executive perceptions in foreign and domestic acquisitions: an analysis of foreign ownership and its effect on executive fate," Journal of World Business, Elsevier, vol. 36(1), pages 85-105, April.
    • Handle: RePEc:eee:worbus:v:36:y:2001:i:1:p:85-105
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    1. James P. Walsh, 1988. "Top management turnover following mergers and acquisitions," Strategic Management Journal, Wiley Blackwell, vol. 9(2), pages 173-183, March.
    2. Krug, Jeffrey A. & Nigh, Douglas, 1998. "Top management departures in cross-border acquisitions: Governance issues in an international context," Journal of International Management, Elsevier, vol. 4(4), pages 267-287, December.
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    3. Brian Rutherford, 2003. "Obfuscation, Textual Complexity and the Role of Regulated Narrative Accounting Disclosure in Corporate Governance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 7(2), pages 187-210, June.
    4. Reddy, Kotapati Srinivasa, 2015. "Determinants of Cross-border Mergers and Acquisitions: A Comprehensive Review and Future Direction," MPRA Paper 63969, University Library of Munich, Germany, revised 2015.
    5. Jaka Cepec & Peter Grajzl, 0. "Management turnover, ownership change, and post-bankruptcy failure of small businesses," Small Business Economics, Springer, vol. 0, pages 1-27.
    6. Jaka Cepec & Peter Grajzl, 2021. "Management turnover, ownership change, and post-bankruptcy failure of small businesses," Small Business Economics, Springer, vol. 57(1), pages 555-581, June.
    7. Reddy, Kotapati Srinivasa, 2015. "The State of Case Study Research in Mergers & Acquisitions: A Review of the Literature in Different Management Streams," MPRA Paper 63939, University Library of Munich, Germany, revised 2015.
    8. Shimizu, Katsuhiko & Hitt, Michael A. & Vaidyanath, Deepa & Pisano, Vincenzo, 2004. "Theoretical foundations of cross-border mergers and acquisitions: A review of current research and recommendations for the future," Journal of International Management, Elsevier, vol. 10(3), pages 307-353.
    9. Díaz Díaz, Belén & Sanfilippo Azofra, Sergio & López Gutiérrez, Carlos, 2013. "Synergies or overpayment in European corporate M&A," MPRA Paper 51070, University Library of Munich, Germany.
    10. Slangen, Arjen H.L., 2006. "National cultural distance and initial foreign acquisition performance: The moderating effect of integration," Journal of World Business, Elsevier, vol. 41(2), pages 161-170, June.
    11. Amit Soni & Avinash Chandra & Sumati Varma, 2020. "Impact of M&As on Employment in the Indian Information Technology (IT) Industry," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(2), pages 311-329, June.
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    17. Lim, Jongha & Makhija, Anil K. & Shenkar, Oded, 2016. "The asymmetric relationship between national cultural distance and target premiums in cross-border M&A," Journal of Corporate Finance, Elsevier, vol. 41(C), pages 542-571.
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