Managing risk in mergers and acquisitions activity: beyond ‘good’ and ‘bad’ management

Abstract

Purpose

This paper aims to assess the impact of the presence/absence of risk management practices on the risk of merger and acquisition (M&A) failure.

Design/methodology/approach

An agency theoretic perspective is adopted, along with a mixed-methods approach to study managerial complexity beyond simply “good” and “bad”. The focus is on an agency conflicts.

Findings

The authors first present an integrated framework that classifies managerial behaviour and risk management, where M&A bids can become vehicles for maximising managerial benefits rather than shareholder value. The authors proceed to consider M&A activity that benefits both managers and shareholders in the presence of risk management strategies.

Research limitations/implications

The paper highlights the benefits of multiple paradigms and research paths that address dimensions captured by an agency theoretic perspective.

Practical implications

The authors regard this paper as having particular significance in that the global financial crisis has impacted M&A activities and objectives, shifting the employment and related risks faced by managers.

Originality/value

The paper suggests future research paths to advance the understanding of the complex behaviour of managers involved in M&A activities that go beyond the classification of “good” and “bad” managers.

Citation

Bhimani, A., Ncube, M. and Sivabalan, P. (2015), "Managing risk in mergers and acquisitions activity: beyond ‘good’ and ‘bad’ management", Managerial Auditing Journal, Vol. 30 No. 2, pp. 160-175. https://doi.org/10.1108/MAJ-08-2014-1079