Do Entrepreneurs Make Predictable Mistakes?

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Do Entrepreneurs Make Predictable Mistakes?

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dc.contributor.author Klein, Peter G. en_US
dc.contributor.author Klein, Sandra K. en_US
dc.date.accessioned 2009-02-04T10:25:26Z
dc.date.available 2009-02-04T10:25:26Z
dc.date.issued 2004-03-23T00:00:00Z en_US
dc.identifier.uri http://hdl.handle.net/10398/6905
dc.description.abstract We assess the argument that corporate acquisitions are driven mainly by agency considerations. This argument holds that certain kinds of mergers—mergers between firms in unrelated industries, mergers between firms with large differences in price-earnings ratios, and mergers financed with stock swaps, for example—will consistently fail, eventually being reversed in a divestiture. Appealing to Mises’s theory of entrepreneurship, we argue instead that divestitures of previously acquired assets usually result from experimentation and learning, healthy attributes of a market economy. We then describe empirical evidence that the long-term success or failure of corporate acquisitions cannot, in general, be predicted by measures of agency conflicts. We also show that mistaken acquisitions are more likely under certain circumstances, namely during periods of intense, industry-specific regulatory activity. This is consistent with the view, expressed repeatedly in the Austrian literature, that entrepreneurial error is associated with government intervention—in particular, with government ownership of property and interference with the price system. JEL Classifications: D84, G34, G38 Key words: acquisitions, divestitures, entrepreneurship, market process, experimentation en_US
dc.format.extent 24 s. en_US
dc.language eng en_US
dc.relation.ispartofseries LINK Working papers;2001-09 en_US
dc.subject.other kep en_US
dc.title Do Entrepreneurs Make Predictable Mistakes? en_US
dc.type wp en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Institut for Industriøkonomi og Virksomhedsstrategi
dc.contributor.departmentshort IVS
dc.contributor.departmentuk Department of Industrial Economics & Strategy
dc.contributor.departmentukshort IES
dc.idnumber x656406428 en_US
dc.publisher.city København en_US
dc.publisher.year 2001 en_US
dc.title.subtitle Evidence from Corporate Divestitures en_US


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