Economic Crisis, Acquisitions and Firm Performance

摘要

This paper examines the effects of the recent economic crisis, relative to the pre-crisis period, on firm acquisition behavior and how such behavior impacts short-term firm performance. We develop hypotheses on how firms adjust their geographic and product market scope in response to the economic crisis. Using data on acquisitions in Italy during the period 2007-2010, we analyze whether firms use acquisitions to enter and/or expand the firm's presence in different product markets and different geographic markets before and during the economic crisis. Results suggest that the crisis negatively affects the likelihood of both diversifying and crossborder acquisitions, which is consistent with the behavioral theory of the firm. As a response to economic downturns, firms tend to focus on their core business as well as their home market, suggesting they are more reluctant to explore new industrial and geographical markets. We then rely on the diversification literature to link acquisitions to firm performance. We find that diversifying acquisitions have a negative effect on short-term accounting performance in crisis times. Crossborder acquisitions have a positive impact on short-term accounting performance in crisis times, although this impact tends to become weaker (though not significantly) than during non-crisis times. We lastly discuss the implications of these findings for managers and scholars. (C) 2015 Elsevier Ltd. All rights reserved.