Investors’ Perceptions of Managerial Opportunism in Corporate Acquisitions: the moderating role of environmental conditions

Abstract

I argue and found that the effectiveness of a firm’s monitoring mechanisms to prevent managerial opportunism in acquisitions becomes more important under high environmental complexity and/or dynamism because of the increased information asymmetry between investors and top executives under these conditions. I also found that increased monitoring under non‐complex and/or stable environments may be viewed negatively by investors, and that symbolic information about governance arrangements affects investors’ evaluations of managerial opportunism in acquisitions. The results highlight the need for more research on factors that influence the explanatory power of agency theory.

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