Relational configurations with information intermediaries: The effect of firm-investment bank ties on expected acquisition performance

Authors


Correspondence to: Alexander Sleptsov, Department of Business Administration, University of Illinois in Urbana-Champaign, 308 Wohlers Hall, 1206 South Sixth Street, Champaign, IL 61822, U.S.A. E-mail: sleptsov@illinois.edu

Abstract

Recognizing information-related problems in acquisition transactions, we study how the characteristics of acquiring firms' relationships with information brokers or intermediaries like investment banks affect firms' access to acquisition-related information, thus influencing expected acquisition performance. We propose that relational configurations that enhance the intermediaries' ability and willingness provide the most beneficial and appropriate information to acquiring firms. We find that acquirers' expected acquisition performance increases with the number of prior transactions with investment banks but decreases when relationships with banks become exclusive. Further, the positive effect of number of prior transactions becomes even stronger for less related acquisitions. Our study provides insights on the beneficial performance implications of competition in multiple but nonexclusive relationships with information intermediaries such as investment banks. Copyright © 2013 John Wiley & Sons, Ltd.

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