Mergers and Acquisitions for Business Sustainability in Emerging Markets During a Vague Era: A Literature Analysis
Main Article Content
Keywords
Mergers and acquisitions, Corporate Governance., Vague era, Business Sustainability, Emerging Markets
Abstract
Mergers and acquisitions are the most popular modes of external corporate growth. Business sustainability, which seeks present returns without compromising the ability to earn returns in the future, has come under serious challenges in an environment of uncertainty. While academic literature suggests that in periods of fundamental uncertainty, there is a decline of mergers and acquisitions, this paper analyses an emerging body of research that suggests that merger and acquisition deals in a vague era actually deliver more value compared to those made in normal economic conditions, which most empirical studies do not deliver much value for the acquirer. This paper therefore suggests that firms in emerging markets can use mergers and acquisitions during a downturn to deliver superior value to shareholders. It also argues that mergers and acquisitions are a corporate governance issue, because it is at the board level that the overall strategy of the firm is implemented, including the various growth options of the firm. However, further research on merger and acquisitions during a vague era need to be conducted in various regions of emerging markets.
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References
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Gatti, S., & Chiarella, C. (2013). M&A in Uncertain Times: Is There Still Value In Growing. Carefin Cantre for Applied Research in Finance.
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Goddard, J., Molyneux, P. and Zhou, T. (2012). Bank mergers and acquisitions in emerging markets: evidence from Asia and Latin America. The European Journal of Finance, 18, 419-438.
Gort, M. (1969). An Economic Disturbance Theory of Mergers. Quarterly Journal of Economics, 83, 624-642.
Hasbrouck, J. (1985). The Characteristics of Takeover Targets: Q and Other Measures. Journal of Banking and Finance, 9, 351-362.
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Hotchkiss, E. S., & Mooradian, R. M. (1997). Vultures Investors and The Market for Control of Distressed Firms. Journal of Financial Economics, 32, 401-432.
Hotchkiss, E. S., & Mooradian, R. M. (1998). Acqusitions as a Means of Restructuring Firms. Journal of Financial Intermediation, 7(3), 240-262.
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International Finance Corporation. (2021). How Firms are Responding and Adapting During COVID-19 and Recovery
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Jeurissen, R., & Elkington, J. (2000). Cannibals with Forks - Triple BottomLine of 21st Century Business. Journal of Business Ethics, 23, 229-231.
Jose, P.D., (2016) Sustainability Education in Indian Business Schools: A Status Review. AD-minister, 28, 255 - 272.
Julio, B., & Yook, Y. (2012). Political Uncertainity and Corporate Investment Cycles. The Journal of Finance, 67(1), 45-83.
Kale, P. (2004). Acquisition value creation in emerging markets: An empirical study of acquisitions in India. In Academy of Management Best Paper Proceedings 2004. New Orleans: Academy of Management, 1–6.
Khanna, T., & Palepu, K. G. (2010). Winning In Emerging Markets: A Roadmap for Strategy and Execution . Boston MA: Harvard Business Press.
Kooli, C.; Lock Son, M. (2021). Impact of COVID-19 on Mergers, Acquisitions & Corporate Restructurings. Businesses 2021, 1, 102–114. https://doi.org/10.3390/ businesses1020008
Komlenovic, S., Mamun, A., & Mishra, D. (2011). Business Cycle and Aggregate Merger Activity. Journal of Economics and Finance, 35, 239-259.
Kunc, M., Bandahari, R. (2011). Strategic development processes during economic and financial crisis. Management Decision, 49 (8), 1343- 1353.
Laamanen, T., & Keil, T. (2008). Performance of Serial Acquirers: Toward An Acquisition Program Perspective. Strategic Management Journal, 29, 663-672.
La Porta, R., Lopez-De-Silanes, F., & Shleifer, A. (1999). Corporate ownership around the world. The Journal of Finance, 54, 471–517
La Porta, R., Lopez-De-Silanes, F., & Shleifer, A. (1999). Law and Finance. Journal of Political Economy, 106, 264-296.
Lebedev, S., Mike, W., En, X., & Charles E. (2015). Mergers and acquisitions in and out of emerging economies. Journal of World Business, 50: 651–62.
Lee, K. N. (2018). Cross-border Mergers and Acquisitions Amid Political Uncertainty: A Bargaining Perspective. Strategic Management Journal, 39, 2992-3005.
Leon-Gonzales, R., & Tole, L. (2015). The Determinants of Mergers & Acquisitions In A Resource-based Industry: What Role Environmental Sustainability? Review of Economic Analysis, 7, 111-134.
Liu, X. (2009). Impacts of the Global Financial Crisis on Small and Medium Enterprises in the People’s Republic of China. ADBI Working Paper 180. Retrieved 16th February, 2022,
Long, P. H. (2015). Merger and Acquisition In The Czech Banking Sector-impact of Bank Mergers on the Efficiency of Banks. Journal of Advanced Management Science, 3(2), 86-92.
Luke. H.C (2011). Board leadership structure under fire: CEO duality in the post-restructuring period. Academy of Strategic Management Journal, 10, 1-16.
Man, D., Viet, H., Edward, J., Darren, H., Phuong, U. & Premkanth, P(2021). Country uncertainty, power distance, and payment methods in acquisitions. The European Journal of Finance, 1-30
Manne, H. (1965). Mergers and the market for corporate control. Journal of Political Economy, 73, 110–120.
Martynova, M., & Renneboog, L. (2008). A Century of Corporate Takeovers: What Hav We Learned and Where Do We Stand? Journal of Banking and Finance, 32(10), 2148-2177.
McDonald, R., & Siegel, D. (1986). The Value of Waiting To Invest. The Quarterly Journal of Economics, 101(4), 707-727.
Meyer, A. D. (1982). Adapting to Environmental Jolts. Administrative Science Quarterly, 27(4), 515-537.
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Michail, P., Vogiatzoglou, M., Koutoupis, A. and Drogalas., G. (2021). Corporate mergers and accounting performance during a period of economic crisis: Evidence from Greece. Journal of Business Economics and Management, 22, 577–595
Moeller, S., Schlingemann, F., & Stulz, R. (2005). Wealth Destruction On A Massive Scale? A Study of Acquiring Firm Returns In The Recent Merger Wave. Journal of Finance, 60, 757-782.
Navarro, P. (2005). The Well-Timed Strategy: Managing the Business Cycle. California Management Review, 48, 71-91.
Nelson, R. L. (1959). Merger Movements In American Industry, 1895-1956. NBER Books.
Nguyen, N. H., & Phan, H. V. (2017). Policy Uncertainty and Mergers and Acquisitions. Journal of Financial and Quantitative Analysis, 52(2), 613-644.
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Published
Dec 12, 2022
Article Details
How to Cite
Ogendo, J. L., & Ariemba, J. (2022). Mergers and Acquisitions for Business Sustainability in Emerging Markets During a Vague Era: A Literature Analysis. AD-Minister, (41), 35–56. https://doi.org/10.17230/Ad-minister.41.2
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Research Articles
Author Biographies
Joan Lilian Ogendo, The Technical University of Kenya
PhD (Business Administration) - University of Nairobi, Senior Lecturer, Department of Business Administration, Management and Entrepreneurship, The Technical University of Kenya. Email: joan_lilian@hotmail.com ORCID: 0000-0002-2167-0455
Jared Ariemba, The Technical University of Kenya
PhD (Finance and Banking)-Dedan Kimathi University of Technology, Lecturer, Department of Accounting and Finance, The Technical University of Kenya, Nairobi, Kenya. Email: jared.ariemba@gmail.com ORCID: 0000-0002-4902-0630
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