Enterprise Systems and Mergers and Acquisitions
2017-07
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Enterprise Systems and Mergers and Acquisitions
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2017-07
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This dissertation studies the impact of enterprise systems on mergers and acquisitions. The first chapter examines the relationship between Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and Supply Chain Management (SCM) systems and mergers and acquisitions (M&A). It also investigates how these relationships are contingent on the characteristics of the focal firm and its industry environment. The key argument is that since enterprise systems can reduce agency cost associated with internal coordination and the transaction cost of coordinating with customers and suppliers, enterprise systems may be related with horizontal, vertical and conglomerate M&A. Using a sample of 707 Fortune 1000 firms that made 1,973 M&A deals from 2009 to 2014, the empirical analysis suggests that ERP systems are positively related with horizontal and conglomerate acquisitions, more so for larger firms; CRM systems are negatively related with vertical M&A, especially when downstream industry dynamism is low; and SCM systems are negatively related with vertical M&A, particularly when supplier industry concentration is low. The second chapter examines the impact of enterprise systems (ES) of both the acquiring and target firms’ on the premium and the capital market reaction of mergers and acquisitions (M&A). The results that the extensiveness and standardization of ES are significantly associated with both market value enhancement of the acquirer as well as high market valuation for the target highlights the important role information systems play in the creation as well as the deployment of firm resources and capabilities that deliver competitive advantages to firms. Also, the availability of reliable and current information from multiple functional groups and business units that can be easily consolidated for decision making, and the availability of tools for financial modeling and simulations of different scenarios, enables senior executives to make informed and evidence based decisions in key aspects of M&A such as target choice and target firm valuation. This enables the acquirers to accurately assess the unique synergy that can be realized in the acquisition, thus preventing the acquirer from overpaying for the acquisition.
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University of Minnesota Ph.D. dissertation. July 2017. Major: Business Administration. Advisor: Gautam Ray. 1 computer file (PDF); v, 119 pages.
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Cao, Chengxin. (2017). Enterprise Systems and Mergers and Acquisitions. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/191389.
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