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| Author: | Arikan, A.M. McGahan, A.M. |
| Title: | The development of capabilities in new firms |
| Journal: | Strategic Management Journal
2010 : VOL. 31:1, p. 1-18 |
| Index terms: | new enterprise alliances mergers initial public offerings strategic planning stock markets USA |
| Freeterms: | acquisitions |
| Language: | eng |
| Abstract: | This study deals with evidence of corporate capabilities for performing acquisition and alliance (hereafter as: a-and-a/s.) deals in young firms. Investors are hypothesized to predict the future based on information about a firm's capabilities. It is evaluated whether stock prices impute expectations that firms will capably pursue particular a-and-a. programs. The dataset contains firms having gone through an initial public offering (IPO) in the United States (U.S.) from 1988 to 1999. Included is information on all of their post-IPO a-and-a/s. and on how the stock prices changed. The findings suggest that within the 1st year after IPO, investors expect firms to perform particular streams of a-and-a/s. reflecting their unique histories of demonstrated capabilities. There is also found evidence of investors being not able to fully anticipate deal programs. A capabilities-based view of the firm is supported. It is also found out that accurate inference using event-study methods may require digging deep into the firms' early histories. |
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