{"title":"‘Know when to fold 'em’: Policy uncertainty and acquisition abandonment","authors":"Andrew Ferguson, Cecilia Wei Hu, Peter Lam","doi":"10.1111/acfi.13179","DOIUrl":null,"url":null,"abstract":"Abstract This study investigates how policy uncertainty affects the acquisition process during the post‐announcement period. Utilising a sample of Australian mining project acquisitions over 1998–2017, we find that rising policy uncertainty after initial acquisition announcements is associated with delays in deal completion. In addition, prolonged high policy uncertainty plays an important role in triggering acquisition abandonment. Further, the stock market reacts less negatively to deal abandonment decisions made amid protracted policy uncertainty, and such reactions are associated with managers' explanations for terminating the deals. Overall, our findings highlight the importance of policy uncertainty as a ‘deal‐breaker’ in acquisitions.","PeriodicalId":47973,"journal":{"name":"Accounting and Finance","volume":"143 1","pages":"0"},"PeriodicalIF":3.1000,"publicationDate":"2023-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Accounting and Finance","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1111/acfi.13179","RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
Abstract This study investigates how policy uncertainty affects the acquisition process during the post‐announcement period. Utilising a sample of Australian mining project acquisitions over 1998–2017, we find that rising policy uncertainty after initial acquisition announcements is associated with delays in deal completion. In addition, prolonged high policy uncertainty plays an important role in triggering acquisition abandonment. Further, the stock market reacts less negatively to deal abandonment decisions made amid protracted policy uncertainty, and such reactions are associated with managers' explanations for terminating the deals. Overall, our findings highlight the importance of policy uncertainty as a ‘deal‐breaker’ in acquisitions.
期刊介绍：
Accounting & Finance enjoys an excellent reputation as an academic journal that publishes articles addressing significant research questions from a broad range of perspectives. The journal: • publishes significant contributions to the accounting, finance, business information systems and related disciplines • develops, tests, or advances accounting, finance and information systems theory, research and practice • publishes theoretical, empirical and experimental papers that significantly contribute to the disciplines of accounting and finance • publishes articles using a wide range of research methods including statistical analysis, analytical work, case studies, field research and historical analysis • applies economic, organizational and other theories to accounting and finance phenomena and publishes occasional special issues on themes such as on research methods in management accounting. Accounting & Finance is essential reading for academics, graduate students and all those interested in research in accounting and finance. The journal is also widely read by practitioners in accounting, corporate finance, investments, and merchant and investment banking.
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