How Systemic Crises Uproot and Re-establish Investors’ Acquisition ‘Recipes’: A Temporally Bracketed Qualitative Comparative Analysis

We contribute to the literature on acquisitions by examining how investors’ cognitive schemata codifying their beliefs concerning the attributes of deal success (‘recipes’) are impacted by systemic crises. Specifically, we examine how and why configurations of attributes signalling deal attractiveness, acquirer competence, and acquirer corporate governance shape investors’ reactions to acquisition announcements before, during, and after the Great Financial Crisis of 2008–9. We apply temporally bracketed fuzzy sets qualitative comparative analysis (fsQCA) on a sample of 1867 acquisition announcements. Our results show that investors not only assess acquisition signals holistically, but also that their preferences change when a crisis uproots orthodox deal ‘recipes’ that were once believed to produce successful outcomes. We show that the explorative nature of investor behaviour changes when systemic crises strike, with investors becoming more explorative – as evidenced by a greater number of ‘recipes’ eliciting positive reactions – during crises than before or after. Second, we find that investors do not simply favour deals with a maximum number of safeguards, but rather employ a compensatory logic that matches attributes signalling deal risk with specific assurances. The importance of offering assurances increases following crises, suggesting that investors progressively prefer acquirers to protect their interests.