Journal ArticleDOI
The Stock Market Reaction to the Hiring of Management Consultants: A Signalling Theory Approach
Donald D. Bergh,Pat Gibbons +1 more
Reads0
Chats0
TLDR
In this article, the authors examine how the stock market reacts to the public announcement of the hiring of management consultants and whether it differentially values clients on the basis of their financial profitability and the brand-name of the engaged consultant.Abstract:
Drawing from signalling theory, this study examines how the stock market reacts to the public announcement of the hiring of management consultants and whether it differentially values clients on the basis of their financial profitability and the brand-name of the engaged consultant. An event study analysis of 118 client firms that publicly announced the hiring of management consulting firms finds that the stock market, on average, responded positively and significantly to the engagement news. Regression analysis further reveals that the stock market reaction tended to be the highest for client firms that had the highest profitability levels. In addition, the stock market reaction to the hiring announcement was not related to the consultant's brand-name reputation; clients engaging the most reputable consultants (e.g. McKinsey & Company, Bain, Boston Consulting Group, Booz-Allen Hamilton) did not realize any different market response than those clients that employed the other consultants. Overall, most client firms that publicly announced the hiring of management consultants experienced a rise in their market value and those that had the highest financial profitability realized the highest increase. Further, the findings imply that there may be boundaries to reputational spillover benefits in partnering relationships.read more
Citations
More filters
Posted Content
Economics of Information
TL;DR: In this article, the authors introduce the concept of ''search'' where a buyer wanting to get a better price, is forced to question sellers, and deal with various aspects of finding the necessary information.
The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields (Chinese Translation)
Paul DiMaggio,Walter W. Powell +1 more
TL;DR: In this article, the authors argue that rational actors make their organizations increasingly similar as they try to change them, and describe three isomorphic processes-coercive, mimetic, and normative.
Journal Article
Turnaround: Retrenchment and recovery
D. Keith Robbins,John A. Pearce +1 more
TL;DR: In this paper, an industry study provided an anchored operational definition of a turnaround situation, indications of its internal and external causes, and an application of an absolute measure of its severity.
Posted Content
Relative absorptive capacity and interorganizational learning
Peter J. Lane,Michael Lubatkin +1 more
TL;DR: In this article, the authors reconceptualize the firm-level construct absorptive capacity as a learning dyad-level measure, relative absorptive capacities, and test the model using a sample of pharmaceutical-biotechnology R&D alliances.
Journal ArticleDOI
Signalling theory and equilibrium in strategic management research: an assessment and a research agenda
TL;DR: In this paper, a content analysis finds that most strategic management signalling theory studies have not fully leveraged separating equilibrium, which occurs when a signal's expectations are confirmed through experience, and it presents two possible paths for future research.
References
More filters
Book ChapterDOI
Firm Resources and Sustained Competitive Advantage
TL;DR: In this article, the authors examined the link between firm resources and sustained competitive advantage and analyzed the potential of several firm resources for generating sustained competitive advantages, including value, rareness, imitability, and substitutability.
Book ChapterDOI
The iron cage revisited institutional isomorphism and collective rationality in organizational fields
Paul DiMaggio,Walter W. Powell +1 more
TL;DR: In this paper, the authors argue that rational actors make their organizations increasingly similar as they try to change them, and describe three isomorphic processes-coercive, mimetic, and normative.
Journal ArticleDOI
Absorptive capacity: a new perspective on learning and innovation
TL;DR: In this paper, the authors argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities.
Journal ArticleDOI
Common risk factors in the returns on stocks and bonds
Eugene F. Fama,Kenneth R. French +1 more
TL;DR: In this article, the authors identify five common risk factors in the returns on stocks and bonds, including three stock-market factors: an overall market factor and factors related to firm size and book-to-market equity.
Journal ArticleDOI
A Resource-Based View of the Firm
TL;DR: In this paper, the authors explore the usefulness of analyzing firms from the resource side rather than from the product side, in analogy to entry barriers and growth-share matrices, the concepts of resource position barrier and resource-product matrices are suggested.