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GAMBLING OR STRATEGIZING? CEO COGNITIONS AND PERCEPTIONS OFSUCCESS IN THE GLOBAL MERGERS AND ACQUISITIONS GAME

ABSTRACT

Repeated but largely inaccurate predictions of success are central to the continuedpopularity and profligacy of mergers and acquisitions. Drawing from theories of

strategic discourse, decision making, and individual agency and based on theempirical context of a large international banking acquisition, we develop a model ofCEO predisposition for the interpretation of M&A success. The model proposes anarray of factors influencing chief executive predictions and subjective judgments ofsuccess even in the face of conflicting evidence.

HIGH RISK, HIGH STAKES AND LOW REWARDS?

Mergers and acquisitions are risky transactions, but CEOs mastermindingacquisitions tend overconfidently to predict their success (Heaton 2002; Malmendierand Tate 2005; Billett and Qian 2008). The evidence from more than a century ofmerger, acquisition and takeover activity weighs very strongly against the fulfillmentof such expectations (e.g., Dewing 1921; Agrawal, Jaffe and Mandelker 1992;

Moeller, Schlingemann and Stulz 2005). Why then do chief executives incline sostrongly toward anticipating and judging their transactions as successful? In thispaper we examine factors influencing corporate leaders expressed interpretations ofsuccess (or less frequent interpretations of failure) in the merging of multinationalcompanies. Rather than approaching mergers and acquisitions (M&A) from theoperational perspective of joining together systems or the financial perspective ofstock price variations, our research addresses the subjective assessmentsevidenced by centrally networked agents with visible media profiles in multinationalarenas. Intercorporate combinations have been frequently examined from financial,economic, strategic and cultural perspectives. Except notably in the work o f Vaaraand colleagues (Vaara 2003; Vaara, Kleymann and Serist 2004; Vaara, Tienari andLaurila 2006), they have been relatively neglected as sociopolitical eventsconstructed through the calculated use of language viewed through a critical lens.Drawing from theories of strategic discourse, decision making, and individual agencyin a multinational context, we contribute to this underexplored area by inquiring intoarticulations of M&A success or failure.We study the research question conceptually as mot ivated by a particular case. Thiscase involves an unprecedented consortium of three large banks (Royal Bank ofScotland, Banco Santander, and Fortis) from three different countries (UK, Spainand Belgium) undertaking to acquire a fourth large bank (ABN AM RO of theNetherlands). In this collaborative and hostile takeover, a fifth firm comes into play:the investment bank (Merrill Lynch) uniquely advising the consortium. As counselorto all three firms, Merrill Lynch (which in late 2008 was taken over by Ban k of

America) proposed boundary-pushing combinations of financing initiatives (rightsissues, equity swaps, and leverage) to be followed by integration tactics selected byeach acquiring firm (in brief, conquering the acquired firm, collaborating with theacquired firm, or divesting the acquired firm).Based on our theoretical framework andthe details of this case, we develop propositions to elucidate the hard -held images ofinitial success, reluctantly forfeited only as disaster arose for at least two of t heacquiring firms.


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EMPIRICAL CONTEXT AND THEORETICAL APPROACHExamining documents describing the RBS-Santander-Fortis collaborative andincompletely consummated acquisition of ABN AMRO in 2007-2008, we first identifymajor cultural, financial and transformational aspects of this attempted record-breaking deal in the international banking industry. Featuring the viewpoint of topexecutives as portrayed in the US and European business media, we have begun to

track how leadership tactics and pronouncements change within the unfolding M&Atransaction. The composite represents a tale of high expectations, innovativeunderwriting arrangements, amiable interorganizational leadership interactions,prompt regulatory agency approval, cautious shareholder and stake holderapprobation, and seemingly smooth initial execution. The global credit markets crisisimploded shortly after the three -way acquisition had received the required regulatorysanctions and each acquiring bank had entered the early implementation phases forsubsuming or selling its share of the target. Revelations from each bank of ethicalbreaches and large losses quickly followed. Part of our methodological challengehas been to collect extensive business media content in the two main languages(Dutch and English) representing multiple involved countries (Belgium, theNetherlands, UK and US). Our research design includes data collection from leading

general and financial newspapers as well as other news outlets. An extensive arrayof public documentsfrom the international business press, EU/EC documents, andcorporate publicationsis commonly available in a high-profile transaction such asthe RBS-Santander-Fortis intended acquisition of ABN AMRO. We concentrate onthe Fortis part of the acquisition to take advantage of our respective scholarly culturaland linguistic backgrounds (Dutch, French and English -speaking Belgian and nativeEnglish-speaking US) and also to highlight the strongly transformational aspects of adeal nearly catapulting the mid -rank bank Fortis into the top tier. The experiences ofthe acquiring banks provide valuable insights into the total acquisition andpostacquisition milieu. Each firm had its own serial acquisition history creatingorganizational traditions and climates conduci ve or inhibitory to fulfilling the focaldeal (see Appendix for additional detail). Briefly by way of background, it is helpful toknow that Barclays PLC (UK) first courted ABN AMRO (Netherlands), which thenreceived a hostile takeover bid from an internat ional consortium composed of theRoyal Bank of Scotland PLC (UK), Fortis NV (Belgium and the Netherlands), andBanco Santander SA (Spain). The three partners had complementary interestsbased on their respective competitive competencies and geographic doma ins. TheEuropean Commission sanctioned the collaborative bidding and dismantling plan.RBS, the lead player, targeted the ABN AMRO global corporate bank (including theDutch wholesale business) and the US division; Santander, the second member ofthe consortium, selected the Italian and Brazilian subsidiaries; Fortis corralled theremaining operations in the Netherlands, including the private banking and assetmanagement businesses. Transformational organizational change and competitive

repositioning have sometimes occurred in large M&A transactions. At their mostmetamorphic, these transactions have created business entities of vastly revisedform and function in the international marketplace. The banking industry haswitnessed its share of gargantuan consolidations to form global leviathans such asCitigroup, UBS and ICBC. Moreover, large-scale banking M&A deals have been abellwether for transformative combinations in other industries. Such were thepresumptive success expectations of the three acquiring firms in the ABN AMROtransaction. By studying a transaction that moved quickly from inception to near -cataclysmic denouement, we have had the advantage of reviewing both real time


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and recently retrospective media assessments. The span of events runs rapid ly fromacquisition offer (April 2007) to acceptance (October 2007) to adulation amidstimminent expansion (November 2007-May 2008) to unanticipated financialdownturns and retreat (June-July 2008), stockholder rebellion (July -August 2008),and emergency nationalization measures (October 2008), ironically culminating in aform of reverse acquisition with ABN AMRO prospectively again dominating Fortis in

Dutch retail banking markets (November 2008). Frequent changes in the toppositions occurred, and executive departures eased by enormous goldenparachutesseverance severely disproportionate to both the economic climate andthe performance of the firmsprovoked fervent outcries (December 2008).Secondary data collection for additionally understanding the hist orical context hasfurther informed our investigation of the MNCs combining, diverging, andrecombining in new ways. This study draws from the literatures on actor -oriented,sociopolitical perspectives within international organizational settings (e.g., Ge ppert2003; Geppert, Williams and Matten 2003; Drrenbcher and Gammelgaard 2006;Scherer, Palazzo and Baumann 2006); the role of media in business and society(e.g., Lamertz & Baum 1998; Mazza & Alvarez 2000;Vaara, Tienari & Laurila 2006;Watson 1998); M&A purpose, implementation and performance (e.g., Agrawal &

Jaffe 2003; Healy, Palepu & Ruback 1992; Moeller, Schlingemann & Stulz 2005);decision making in situations of high risk and uncertainty (e.g., Staw 1976; Staw,Sandelands & Dutton 1981; Tversky & Kahneman 1974); and strategic discoursemanipulations accompanying leadership as a language game (e.g., Coffee, Rose &Lowe-Ackerman 1988; Hirsch 1986; Hirsch & Andrews 1983; Pondy 1978;Robichaud, Giroux & Taylor 2004; Westwood & Linstead 2001). Our contr ibutioncenters on an enhanced understanding of the intersection of individual and sharedinterests in politically sensitive and fiscally volatile business situations involving manycountries, dealmakers and organizations. We contend that the more competit ive,pressured and financially constrained the acquisition context, the more labile theleadership. Labile means changeable in a potentially unsteady way. We apply theterm here to an adaptability provoked by economic exigencies, where thatadaptability may range from productive to destructive as corporate leaders under firestruggle to adjust to adversely changing circumstances. Our approach presumesknowledge as a social construction reflecting subjective realities and micro -politicaldisharmonies. The aspects of language (e.g., tone, secrecy, openness, ambiguity,uncertainty) conveyed in the media illuminate embattled interorganizationalboundaries, which in turn help explain why mergers and acquisitions between MNCsare so difficult. While the languages of the erstwhile combining firms (Fortis and ABNAMRO) overlap, suggesting the possibility of kinship, the national and organizationalcultures of the two firms have been distinct, creating an atmosphere of distance. TheFortis experience with ABN AMRO contrasts with the experiences of RBS andSantander regarding their respective acquisitions of parts of the former Dutch global

financial giant. The stories of subsidiary and headquarters managers and affiliatedfinancial advisors, as portrayed in numerous documentary sources, reveal theincongruities and conflicts in merging organizations across borders. The irony is thatthe merging firms were already multinationals with operations in many nations, yetthe different headquarters locations (even when Fortis h ad dual Belgian and Dutchheadquarters) represented unique deeply -rooted economic, historic and politicalidentities imperiling interactions among the key actors from each firm. These inter -firm, cross-border clashes of the merger exist alongside the established intra-firm,cross-border conflicts within the MNC (Drrenbcher and Gammelgaard 2006).


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Sociopolitical dialectics of conflict and cooperation, autonomy and interdependency,subjugation and support appear in the interactions of competing individuals o rinterest groups merging firms across national boundaries.

TOWARD A SOCIOPOLITICAL-LINGUISTIC FRAMEWORK FORUNDERSTANDING EXPRESSED SUCCESS OR FAILURE IN THE MERGING OF

MULTINATIONA FIRMS

The previous section described the empirical context motivating the currentconceptual inquiry. The present section provides our emergent frameworkconcerning success-laden interpretations. We review prognostications andexpressions of success or failure in mergers, acquisitions and takeovers and offerscritical reflections on leadership utterances. In particular we provide theoreticalperspectives on individual agency and sociopolitical influences in multinationalsettings, international media representations of large interfirm combinations, theperformance of merged firms, judgment and decision making, and the strategic useof language by corporate leaders. (Note that the terms merger, acquisition, ortakeover may be used relatively interchangeably. Apart from shades of meaning, as

will be further remarked, there are no legal or regulatory distinctions.) In conclusionwe discuss implications and future research directions.

M&A Popularity, Implementation and Performance

Although growth by intercorporate combination remains popular in economiesworldwide, dilemmas such as disgruntled employees, disenfranchised stakeholders,and widespread elective or imposed departures abound, intensifying fiefdom andcommunication issues already problematic within the constituent firms. The odds of asuccessful transactionwhether we determine success by shareholder value,accounting performance measures, lack of divestiture (that is, the acquired firm isnot eventually sold off), employee morale, globalization, innovation, or marketshareare undisputedly low (Moeller and Schlingemann 2005; Moeller et al. 2005).M&A deals have been a classic form of organizational disruption, with typicallyadverse results on multiple measures. Yet the lure of worldwide expansion andfavorable returns means these transactions persist as fashionable st rategic tacticsdespite the human and financial costs. Corporate unions can depress shareholdervalue on the acquiring side (e.g., King, Dalton, Daily and Covin 2004) but havenevertheless the potential to build competitive advantage for MNCs in a globaleconomy with increasingly permeable boundaries (Adler and Dumas 1975; Eun,Kolodny and Scheraga 1996). The worldwide diffusion of their products and servicessustains the viability of many firms (Lessard 1973). Consolidation within industriesbecomes a strategic imperative in competitive product markets where size

advantages firms in negotiating contracts and receiving government protections.Beyond the proven financial benefits to target firm shareholders, expansion throughM&A confers symbolic rewards on the acquiring corporations and their chieftains.Intercorporate combining thus functions concurrently as a strategic tool, a vehicle forleadership expression, and a means of status enhancement (see Podolny 1993).The theoretical relevance of major business combinations additionally stems fromthe tenets of institutionalism and population ecology. According to institutionaltheory, certain firms (often those large and established) set the standards for othersto mimic to achieve legitimacy (DiMaggio and Powell 1983; Zucker 1987). In the


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reasoning of population ecology, certain firms (again often those that are large)dominate niches based on organizing for initial conditions, but lack the capability forlarge-scale change (Hannan and Freeman 1977, 1984; Carro ll, Delacroix andGoodstein 1988). Both institutional and population ecology theories predict imperfectresponsiveness to environmental contingencies. Yet contrary to the lockdown ofinertia, mergers arguably constitute a response to global competition, do mestic

deregulation, accelerating stock prices, and technological advances (Shull andHanweck 2001). Not the M&A negotiation but rather the postacquisition integrationposes the greatest challenge to most dealmakers (Birkinshaw, Bresman andHakanson 2000). The economic goals flourish or falter depending on the ease ofimplementation of the deal (Datta 1991; Datta and Puia 1995). Human factors,cultural compatibility, and sociopolitical nuances compel increased attention to non -financial considerations such as balancing CEO attention among competingconstituencies (Allred, Boal and Holstein 2005). Framing the transaction aspartnership rather than conquest-oriented can assist with the transition period.Alternatively, being very clear on the dominant role of the acquirer can simplify themandate for streamlining operations and resource allocation across two firms (Welch2001). Either way, the CEO can succumb to personal and external pressures to put

the most positive spin on a difficult process: to reassure shareholders and analyststhat financial milestones will be met while soothing organizational members andcommunity stakeholders as to the smooth functioning of the firm and regard foroutside interests. Proposition 1: The more extreme the acquisition goals and themore difficult the postacquisition integration period, the more the CEO will be inclinedproactively and repeatedly to label the transaction a success.

The Role of the Media in Business and Society

The importance of M&A transactions further arises from the ubiquitous presence ofcorporations in daily life and the 24-7 media presence. Reflecting corporateimmanence, the rise of investor capitalism has meant greater activity and influenceon the part of individuals and institutions buying or sel ling equity and debt positionsin capital markets (Useem 1993). The previous era of managerial capitalism vestedwide latitude in the general power and decision making authority of chief executivesand boards of directors (Berle and Means 1932; Chandler 19 77; Lorsch and MacIver1989). Fewer individuals owned stock, scruti nized corporate governance, ordemanded executive accountability. The growth of public and private pension plans(as institutional investors pooled the assets of growing numbers of individu als),coupled with prolonged exuberant markets and the concomitant economic prosperity(punctuated by periodic downturns) has corresponded to the increased presence ofinstitutional shareholders on boards and individual shareholders as vocalstakeholders. Reinforcing the rising shareholder voices, industry analysts and the

business media came to exert greater influence on corporate governance, to theextent that executives began to woo these forces for favorable reviews (Khurana2002). Moreover, corporate top leadership and the media more and more adopted asymbiotic relationship as the business press depended on corporate misadventuresfor attention-grabbing news, and CEOs looked to the business press to affirm theirstature and performance (e.g., Bryce 200 2; Berenson 2003; Wade, Porac, Pollockand Graffin 2006). Thus the business press increasingly became an arbiter andinterpreter of firm actions and various business affairs especially in the US and EU(e.g., Micklethwait and Wooldridge 1996). The media -CEO relationship can be close


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and sometimes sympathetic but also still clear -sighted and not sycophantic.Journalists may project the impressions corporations wish to convey yet later offermore penetrating judgments regarding the honesty, practicality, and longer-runimplications of corporate decisions. By audience rule (as in life -or-death decisions bythe crowd in the gladiatorial arenas of ancient Rome), success is success when themass market of investors says it is soexcept that investing as a commonplace has

not necessarily made deep knowledge of firms or markets a commonplace, whichagain leaves open the way for the media to express (or reject) CEO interpretationsand influence investor perceptions of failure or success. As an example of thetransition from laissez-faire capitalism to media-fuelled investor capitalism and theincreased power of the press, we consider types of M&A deals and the interaction ofCEOs and the business press in asserting a typology. While no legal disambiguationexists for the terms merger, acquisition and takeover, distinctions surface in thephrasings of corporate public relations and business reporting. (We refer tophrasings both voiced by CEOs and quoted by business journalists, or used bybusiness journalists on their o wn initiative.) Based on our evolving systematicexamination of M&A coverage in the business press, mergers suggest bilateralnegotiation, agreement, and goodwill, including a low premium and a post -

transaction management and ownership structure with propo rtionate representationof the partnering firms; acquisitions may have amicable negotiations, but the seniormanagement of the acquiring firm usually dominates the combined entity and pays ahigh premium to propitiate the target management and shareowners; takeoversimply elements of force. That is, while acquisitions and takeovers both presume thehegemony of the acquirer, takeovers further involve overtly predatory and coercivebehavior, including deep cost cutting, extensive job reductions, and rapidly e nforcedremoval of the target top management. Differentiating deals becomes an issue ofboth journalistic semantics and corporate strategy. Although mergers may centeron opportunities for revenue growth and acquisitions and takeovers on thebenefits of organizational slimming and cost savings, at the most basic legal level,one firm purchases anotherthus essentially all mergers, acquisitions and takeoversare acquisitions fundamentally (see Flom 2000). Economically it can be arguedthat all intercorporate combinations are inherently cost -cutting measures (Harford2005). The financial objectives espoused by corporate governance usuallyemphasize synergy realization or revenue escalation over cost reduction (Oliver2001), as illustrated by the prevalence of the word merger in the vernacular. In thespirit of firms do not shrink their way to greatness, the business press usuallywrites more favorably (at least initially) of revenue increases to bolster the long -termfinancial profile of the firm than of cost reduction or downsizing for shorter termdefensive purposes (Vaara and Tienari 2008). Proposition 2: Sometimes helped andsometimes hindered by the business media, CEOs select and vary their descriptorsfor the M&A transaction to best convey the image of success.

Actor-Oriented, Sociopolitical Perspectives in Multinational M&A

Issues of personal as well as corporate power and politics are salient yet often latentin mergers and acquisitions, as witnessed by the profusion of public camouflageversus private disarray throughout the course of these transactions (Vaara 2002).Key individual actors and coalitions can facilitate or threaten the successful mergingof MNCs (Haspeslagh and Jemison 1991). This perspective shifts the level ofanalysis downward. Amidst the combative or cooperative interactions of diverse


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individuals and interest groups, firm-level strategy recedes to context and micro-levelrationales and tactics advance in prominence (Geppert 2003). Individuals align witheach other based on shared interests that may be at odds with the corporateagenda. Different interests become manifest in different clusters of allies.Dramatically differing stakeholder expectations stemming from disparate nationalidentities, unique corporate cultures, a nd omnipresent threads of self-interest

surface in individual and group-level gamesmanship (Drrenbcher and Geppert2006) in the enlarged transnational social space of the merged or mergingmultinational firms (Drrenbcher 2007). The CEO becomes the foca l point fortransforming contested ground into common ground (Heifetz 1994). CEOs functionas architects of major M&A transactions (Balmaceda 2006), and as formally -recognized leaders in powerful, high -status positions, they must adjudicate betweencoalitions vying for their attention and other resources. This responsibility translatesinto the pressure to present a flourishing and unified transaction, which CEOs oftenerroneously perceive as a simpler task than openly acknowledging and coping withconflict and dissent (Finkelstein 2003). Proposition 3: The diverging expectations ofvarious individuals and interest groups influence the tensions and assessments ofthe M&A transaction as elided in the success-oriented language of the involved

CEOs.

Decision Making in Situations of Extreme Risk and Uncertainty

The very riskiness and high stakes of multinational (or domestic) acquisitionscontribute to dealmaker tenacity and unwarranted expressions of optimism.Escalation of commitment (Staw 1981) and disregard for sunk costs (Datta,Rajagopalan and Zhang 2003) bind CEOs to faltering strategic maneuvers. Thepublicity and extensive press coverage surrounding large deals further complicatesretreat. An advertisement for a well -known management consulting companydescribes a champion decision making style as 40% information, 60%interpretation. The stated proportions must be impressionistic, but the relativeweightings are suggestive of truth. Individuals start with information as a raw input,which heavily filtered and processed becomes interpretation, the results of whichtend to be viewed by individuals as logical and ordained. In fact the processing ofinformation can be quite subjective with essential biases prevailing (Tversky andKahneman 1974). Decision making under pressure can skew subjectivity evenfurther (Staw, Sandelands and Dutton 1981; Dutton and Jackson 1988). As high -riskbusiness maneuvers offering the elusive promise of high rewards, M&A dealspressure their strategists toward achievingor assessingsuccess. Proposition 4:The larger and more public the M&A transaction, the greater the probability thatCEOs will internalize overcommitment and predict and pronounce deal success.

Leadership as a Language Game

Having previously considered language specifically as expressed through the media,we now turn to language as a weapon or means of command. Language servesmultiple purposesfor instance, in organizational settings and elsewhere, languagereveals motivation and emotion (Pierce 1995), contributes to culture formation (Boje1991), and defines the public roles of key contributors (Gabriel 2000) and therelationship between language and power is complex (Robichaud, Giroux and Taylor2004). For instance, we might reason that the more powerful a CEO is, the less


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subterfuge he or she employs because power affords protection for speakingdirectly. We can also argue the opposite, that more powerful CEOs essay linguisticsubterfuge to preserve their influence by inten tionally confusing and therebycontrolling listeners. As observed by Pondy (1978), leadership is a language gamedesigned simultaneously to provide the stability of routine and to provokeconstrained change. (Leaders desire innovation but not at the price of regime

disruption.) The previously described selection of terms for M&A transactionsdisplays CEO positional power and control and reflects both executive decisionmaking and the sociopolitical construction of reality. What is real is what we perceiveto be real as mediated by interactions and articulations around us (Berger andLuckmann 1967).The sociopolitical construction of M&A transactions provides a more nuanced eventportrait than the straightforward legality of which firm presents as the acquir er(buyer) and which as the target (seller). As previously proposed, different terms(merger, acquisition or takeover) may be selectively applied to the same transaction.Although one term may predominate, it may not be immediately apparent which termin the seemingly contradictory mixture of language represents the true nature of thedeal. What begins with the ideal of a merger, where senior management from both

participating firms plan to share in the governance of the combined entity, may endwith the reality of acquisition, where the culture and management of one firm havedisplaced those of another. Retrospective rationalization and re -labeling of thetransaction may still contribute to impressions of success. In these situations, failurearises not with respect to original expectations but rather with the inability toeffectively reformulate after the event. The distinction among M&A types occurs as

well in the details and implementation of the transaction, such as whether themerged firm leans more toward the acquirer or target in its headquarters location,management structure, or name. The merged firm name inclusive of both acquirerand target infamously functioned as a Trojan Horse for dominating intentions by theacquiring firm in the 1998 cross-border creation of DaimlerChrysler (see FinancialTimes 2000; Vlasic and Stertz 2000; Schneider 2001 on how Daimler -Benzconverted the merger-of-equals deal with Chrysler into a takeover). The acquiringmanagement may preserve the target name not only to succor dealmakers from thetarget side but also because using the better -known, more illustrious and historicname enhances the brand equity of the product portfolio. A prestigious name for theblended firm further lends an aura of success to the combinatorial transaction. Thedeliberate deception of the target by the acquirer promotes the guise of success asdoes an apparent interpersonal affinity between the acquiring and target CEOs (WallStreet Journal 1998). As became more pronounced beginning in the 1990s globalmerger wave, CEOs from both sides of the transaction (acquiring and target) playedprominent roles as strategists, arbiters, and interpreters of the increasingly largertransactions (Holmstrom and Kaplan 2001). The joint leadership language voiced

from these positions of prominence had a false bonhomie, occasionally revealing butmore frequently obscuring the darker reality of deal terms and ramifications (Howe2002). Often aided by the business press (Vaara and Tienari 2008), many acquirershid the intent for dominion behind the fuzzy friendship and inclusivity of the mergerlabel. Whether acquiring CEOs initially portrayed themselves more as allies orenemies of their target counterparts, the working bonds between the two dealmakerswere unlikely to outlast the first anniversary of the transaction (Financial Times2003). The choice of M&A performance measures has depended partly on the CEOand the firms strengths of the moment (Hamel 2000) and partly on analyst


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expectations (Berenson 2003). For instance, postacquisition momentum may beassessed on the basis of equity enhancement (increase in share price and totalmarket capitalization, see Dymski 1999), accounting performance measures (suchas asset productivity or operating cash flow returns, see H ealy, Palepu and Ruback1992; Agrawal and Jaffe 2003), or innovation performance improvement (the numberor combinations of new products brought to market, see Ahuja and Katila 2001).

Even with the post-Sarbanes-Oxley vigilance in financial reporting requi rements,CEOs can still influence the currency of communication with shareholders and themedia, picking and choosing language and measures to present M&A deals to theirbest, most successful-seeming advantage (O'Brien 2007). The numbers announcedbecome part of the selective rhetoric of performance. Proposition 5: The moreprominent the CEOs involved, the greater the declared friendliness between theacquiring and target CEOs, or the more changeable the announced measures ofperformance, the greater will be the expressions of and attributions for success.

DISCUSSION AND IMPLICATIONS

From our perspective emphasizing the importance of subjective success, merging

concerns irrational actors in inefficient markets. Large M&A deals not only constituteimportant corporate strategic and political devices in the global economy, they heraldthe externally-oriented borderless perspective increasingly urged on modernmanagers. Interpretations of merger success or failure arise in the context ofindividual and coalitional level dynamics involving leadership, power, influence, rankand status. Rather than reflexively following the dictates of personal utilitymaximization, irrational actors manifest varying blends of collective and self -interest.Based on our emergent model of interpreted success, individuals in keymanagement or reporting positions use calculated language to assert their favoredrationales for and consequences of merging. Moreover, CEOs (perhaps inconjunction with their financial and legal advisors, d irectors, and contingently-compensated senior executives) deploy carefully selected terms to rationalize theintent and impact of transactions often conceived from aggressively expansionistagendas.By using the subjective vernacular of M&A transactions to understandinterpretations of success or failure, we build on the language -related research ofprevious merger eras, beginning with the Hirsch (1986) exploration (from ambushesto golden parachutes ) of the diffusion and acceptance of hostile takeovers, fol lowedsoon after by the Coffee, Lowenstein and Rose -Ackerman (1988) compilation(knights, raiders and targets) on the causes and consequences of these antagonisticannexations. Hirsch (1986) investigated the political -cultural framing of the hostiletakeovers emblematic of the US in the 1980s, laying the groundwork for continuedresearch given the persistent popularity and profligacy of M&A activity. Vaara andcolleagues (e.g., Vaara, Tienari, Piekkari and Sntti 2005) explored sociopolitical

and linguistic phenomena for European M&A in the 1990s, but these phenomenahave still to be examined for the US and European markets for corporate controltogether in recent merger eras. Moreover, understanding factors contributing tointerpretations of success or failure in the context of competing interests andorganizational turbulence had not been done. Interpretations of success or failureexist in the context of individual and organizational level dynamics. Supplementingour original mission to understand interpre tation mainly at the individual (CEO) level,we infer interpretive markers at higher levels of analysis as well. In addition toindividual values and cognitions, decision making reflects cultural precepts and


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philosophies of the times (Keys, Wells and Edge 1993). Each merger era has itsshibboleths and slogans: for instance, hostile takeover described the archetypaldeal of the 1980s and merger of equals characterized many deals from the1990s into the turn of the millennium. In the first post -millennial merger wave, we findevidence of what we call avoidance of rhetoric of the extremes . Neither avowedlyhostile nor asymptotically equal, transactions such as the ABN AMRO takeover by

the RBS-led consortium are positioned between the poles, involving neith er entirelysubjugation nor placation of the target. The bias hence becomes towards theinterpretation of success by the avoidance of extremes. Whether the actualmeasurable as opposed to subjective interpretive success of these deals might begreater in the present moderate than in the hostile or equal eras remains to be seen.An overview of many decades of M&A transactions (ranging from the robber baron,monopolistic aggregations of the gilded -age 1890s through the strategic equality ofthe new-age-of-opulence unions of the 1990s) suggests that sociopolitical framingsand linguistic legerdemain function as illusions minimizing perceptions of risk ratherthan maximizing realities of gain. Future research will continue in this vein byinvestigating two temporally-connected research questions: How specifically do theinvolved CEOs publicly express the success or failure of major M&A transactions?

How do the expressions of success or failure change over time? Consonant with atheory-for-practice or strategy-as-practice approach (Jarzabkowski 2004), we stressthe practical as well as academic relevance of our inquiry. The merger wave lastingfrom 1993-2000 and the next one running from 2003 -2008 were the first truly globalwaves impacting markets and livelihoods worldwide. Managers and professionals inmerging MNCs would benefit from an enhanced appreciation of specific divisive aswell as conciliatory factors at work. Complementing studies into the dynamics ofblending operational systems or the abstractions of u nderstanding stock pricefluctuations, we have been considering cultural, social and political nuances in avolatile international transaction. A contribution of the empirical extension of thisconceptual examination would therefore be to articulate learni ng points for futurepostacquisition integration and change management practices.

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Documents

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