De-commitment to losing strategic action: Evidence from the divestiture of poorly performing acquisitions

@article{Hayward2006DecommitmentTL,
  title={De-commitment to losing strategic action: Evidence from the divestiture of poorly performing acquisitions},
  author={Mathew L. A. Hayward and K. Shimizu},
  journal={Southern Medical Journal},
  year={2006},
  volume={27},
  pages={541-557}
}
  • Mathew L. A. Hayward, K. Shimizu
  • Published 2006
  • Medicine
  • Southern Medical Journal
  • We use a mental accounting framework to study the conditions in which CEOs de-commit to poorly performing acquisitions and so become more likely to divest them. We test this framework by contrasting the experiences of 68 firms that divested acquisitions with a control sample of 68 firms that did not divest their acquisitions. Consistent with the theory that we use to explain and predict de-commitment, our results suggest that poorly performing acquired units tend to be divested when executives… CONTINUE READING
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