De-commitment to losing strategic action: evidence from the divestiture of poorly performing acquisitions

Hayward, Mathew L. A. and Shimizu, Katsuhiko (2006) De-commitment to losing strategic action: evidence from the divestiture of poorly performing acquisitions. Strategic Management Journal, 27 6: 541-557. doi:10.1002/smj.526

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Author Hayward, Mathew L. A.
Shimizu, Katsuhiko
Title De-commitment to losing strategic action: evidence from the divestiture of poorly performing acquisitions
Journal name Strategic Management Journal   Check publisher's open access policy
ISSN 1097-0266
0143-2095
Publication date 2006-06-01
Sub-type Article (original research)
DOI 10.1002/smj.526
Open Access Status
Volume 27
Issue 6
Start page 541
End page 557
Total pages 17
Place of publication Chichester, Sussex ; Brisbane
Publisher J. Wiley
Language eng
Subject 15 Commerce, Management, Tourism and Services
Abstract We use a mental accounting framework to study the conditions in which CEOs de-commit to poorly performing acquisitions and so become more likely to divest them. We test this framework by contrasting the experiences of 68 firms that divested acquisitions with a control sample of 68 firms that did not divest their acquisitions. Consistent with the theory that we use to explain and predict de-commitment, our results suggest that poorly performing acquired units tend to be divested when executives can place them within attributional accounts (i.e., accounts for the cause of the performance that do not incriminate them) and comprehensive accounts (i.e., within the context of overall firm performance). Copyright © 2006 John Wiley & Sons, Ltd.
Keyword de-commitment
mental accounts
acquisitions and divestitures
Q-Index Code C1

Document type: Journal Article
Sub-type: Article (original research)
Collections: Excellence in Research Australia (ERA) - Collection
UQ Business School Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 39 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 48 times in Scopus Article | Citations
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