The Effect of Management Control Systems on Acquisition Outcomes: An Empirical Study of Scandinavian Companies

Abstract

With our master thesis, we wanted to examine what effect formal management control systems have on acquisition outcomes. To generalise these systems, we used ISO 9001 certification as a proxy, which allowed us to quantify the data for management control systems. We examined the effects for two scenarios, when the target company is certified and when the acquiror is certified. The metrics we used to measure the effects were, change in net income, change in revenue, and change in COGS-to-revenue ratio. We used an average of the results from the three fiscal years before and after the acquisition to calculate these metrics. To test our hypotheses, we used different variations of propensity scores matching models and a nearest neighbour matching model. The results indicate that the effect of the certification is more significant when the acquiror is certified rather than the target. For companies that certified companies acquire, the results indicate a positive increase for all relevant metrics.