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What happens when companies (don’t) do what they said they would? Stock market reactions to strategic integrity

Mavis, Christos, Richter, Ansgar, Landau, Christian, Schmidt, Sascha L., Simons, Tony and Steinbock, Kai (2019) What happens when companies (don’t) do what they said they would? Stock market reactions to strategic integrity European Management Review, 16 (3). pp. 815-831.

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Literature on the “power of words” has emphasized the importance of a firm’s corporate communication as a source of legitimacy and reputation in the eyes of its stakeholders. We argue that it is not just the content or style of a firm’s communication about its strategy, but also the alignment between this communication and its subsequent strategic actions that help building legitimacy amongst stakeholders and creating firm performance. We introduce the organizationlevel construct of “strategic integrity” to capture the notion of alignment between a firm’s strategy communication and its subsequent strategic actions. We investigate the importance of strategic integrity using the case of the German pharmaceuticals firm Bayer AG in the context of its portfolio restructuring. The results of an event study of 98 acquisitions/divestments indicate that stock markets react positively to strategic integrity.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
Landau, Christian
Schmidt, Sascha L.
Simons, Tony
Steinbock, Kai
Date : 28 November 2019
DOI : 10.1111/emre.12175
Copyright Disclaimer : © 2018 The Authors European Management Review published by John Wiley & Sons Ltd on behalf of European Academy of Management (EURAM). This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
Uncontrolled Keywords : Strategic integrity; Legitimacy; Strategy communication; Acquisitions/divestments; Event study
Depositing User : Clive Harris
Date Deposited : 18 Jan 2018 14:55
Last Modified : 13 Dec 2019 10:15

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