Gerry McNamara

Taking Stock of What We Know About Mergers and Acquisitions: A Review and Research Agenda

Scholars from multiple fields have shown increasing interest in the causes and consequences of mergers and acquisitions (M&A). Although this proliferation of research has the potential to significantly improve our understanding of M&A activity, absent is the necessary step of consolidating and integrating extant knowledge. Accordingly, this article develops a framework to organize and review recent empirical findings, principally from management, economics, and finance in which interest in acquisition behavior is high but also from other areas that have tangentially explored acquisition activity such as accounting and sociology. This article identifies patterns and theoretical gaps and provides recommendations for future research aimed at developing a more integrated M&A research agenda for management scientists.

Moving Closer to the Action: Examining Compensation Design Effects on Firm Risk

We examine the influence of CEO equity-based compensation on strategic risk taking by the firm. Building off the Behavioral Agency Model, Agency Theory, and Prospect Theory, we develop arguments about when equity-based compensation elements will increase or decrease executive risk propensity and, in turn, strategic risk taking. Incorporating a behavioral perspective into our models of incentive alignment provides us with new and potentially more accurate predictions about how individual elements of CEO pay will influence risk selection, as well as how equity compensation interacts with cash compensation and with other factors to influence risk preferences. In general, this study provides evidence that CEO equity-based compensation significantly influences strategic risk, but that this influence is more nuanced and complex than conventional treatments of executive compensation assume. In particular, we find that different forms of equity-based pay exhibit dissimilar influences on strategic risk and that their influence changes as their value and vesting status change. Second, we find that cash-based forms of pay moderate the incentive properties of equity-based pay, indicating that cash-based pay may affect how executives perceive risks associated with equity pay. Finally, we find that stock price volatility and board actions each also moderate the incentive effects of equity-based pay. In sum, our results argue for increased recognition of a behavioral perspective on executive compensation and greater precision in how we measure and model the incentive alignment properties of CEO compensation.

The performance implications of participating in an acquisition wave: Early mover advantages, bandwagon effects, and the moderating influence of industry characteristics and acquirer tactics

Acquisitions often occur in waves within industries. We extend the theoretical understanding of such waves by drawing upon research on early mover advantage and bandwagon effects to develop argumen...

DECISION MAKING IN AN ORGANIZATIONAL SETTING: COGNITIVE AND ORGANIZATIONAL INFLUENCES ON RISK ASSESSMENT IN COMMERCIAL LENDING

Although management researchers would like to understand management decisions related to risk, almost all previous research on risk has used either experiments or aggregate corporate data rather than data from actual business decisions. In this initial research on risk in actual business decisions, we examined the risk assessments bankers assigned to commercial borrowers. We tested hypotheses derived from research in strategy, finance, and behavioral decision theory in order to assess the influence of both organizational and cognitive factors on the likelihood of risk assessment errors. Although we found that both organizational and cognitive factors influenced risky decision making, when both were present, organizational factors appeared to overwhelm cognitive biases. Large literatures have developed to explain risk-related behaviors at the individual (behavioral decision theory), organizational, and corporate (finance and strategic management) levels. These literatures reveal a great deal

Risk and Return in Organizational Decision Making

Examining the association between managerial assessments of risk and expected return using nonexperimental data from specific commercial lending decisions, we found that risk-return associations de...

BANKING ON COMMITMENT: INTENDED AND UNINTENDED CONSEQUENCES OF AN ORGANIZATION'S ATTEMPT TO ATTENUATE ESCALATION OF COMMITMENT

Examining commercial lending decisions, we found that increased monitoring of decision makers and changing decision makers attenuated escalation of commitment but also produced unintended effects. ...

Examining the impact and role of special issue and regular journal articles in the field of management

The article discusses the impact and role both special issue and regular issue articles have in management research and publication. There has been a trend in recent years to reserve publication sp...

Are Technology-Intensive Industries More Dynamically Competitive? No and Yes

A substantial body of research in management and related public policy fields concludes that recent decades saw greater dynamic competition throughout technology-intensive (TI) industries, with widespread steady increase in TI industry and business performance instability as key implications. We set this conclusion within a broader framework of purportedly increasing dynamic competition among TI industry businesses, and then test for evidence of its performance implications in a large sample of U.S. businesses operating from 1978 to 1997 in 31 industries, with high average research and development expenditure-to-sales ratios. In the full sample, we find no evidence of sustained increase in TI industry and business performance instability, nor any evidence of significant cross-sectional differences in performance instability between TI and non-TI industry businesses over these 20 years. For a small segment of very high-performing businesses from TI industries, however, we do uncover evidence of declining performance stability and cross-sectional differences in performance stability. We conclude that assumptions of widespread long-term increase in dynamic competition lack robust evidentiary support. It is premature to embrace and apply broadly new theoretical perspectives, management practices, and public policies to TI industry competitive dynamics that may be slightly changed since the late 1970s. Yet, there may be increasing dynamic competition among very high-performing TI industry businesses. In that small realm, careful application of new perspectives, practices, and policies may lead to deeper insight on business behavior and performance in TI industries.

Gender differences in justice evaluations: Evidence from fMRI

Justice research examining gender differences has yielded contrasting findings. This study enlists advanced techniques in cognitive neuroscience (fMRI) to examine gender differences in brain activation patterns in response to procedural and distributive justice manipulations. We integrate social role, information processing, justice, and neuroscience literature to posit and test for gender differences in 2 neural subsystems known to be involved in the appraisal of self-relevant events. Results indicate that the relationship between justice information processing and neural activity in areas representing these subsystems is significantly influenced by gender, with greater activation for females than males during consideration of both procedural and distributive justice information. In addition, we find evidence that gender and distributive injustice interact to influence bargaining behavior, with females rejecting ultimatum game offers more frequently than males. Results also demonstrate activation in the ventromedial prefrontal cortex (vmPFC) and ventral striatum brain regions during procedural justice evaluation is associated with offer rejection in females, but not in males. Managerial implications based on the studys support for gender differences in justice perceptions are discussed.

The Internet as a competitive knowledge tool for top managers

In today’s dynamic marketplace, top managers need information available at their fingertips. The Internet can provide this information at little cost and with little training, eliminating the “middleman” effect present today in most organizations. This paper outlines how the Internet can be used as a competitive knowledge tool to provide senior management with needed information on a real‐time basis. Included are obstacles to top managers’ use of the Internet and to obtaining needed information from the Internet, as well as Web sites of potential use to most top managers.