Investigating Role of Optimism and Explanatory Style on Merger Outcome

Mergers are highly emotional events for employees and high stake events for all leaders associated with deal. We investigate the impact of employee optimism and explanatory style on merger outcome. Does high employee optimism result in successful merger? Does explanatory style of employees influence merger outcome? What explanatory style results in successful merger outcome? We investigate 16 serial acquisitions by Hewlett Packard. Seligman's Attribute Style Questionnaire is administered to sample of 1075 respondents (n=1075) to measure employee optimism and explanatory style. Co-relation study is done between Merger outcome (output variable) and Employee optimism and Explanatory style (input variables). Neural network is used to predict merger outcome and check the efficacy of predicting merger outcome with optimism and explanatory style as input variables.We conclude that high optimism of employees is strongly co-related to successful merger outcome. Explanatory style characterized by taking personal ownership of good events, giving specific explanation (rather than generic explanation) and attributing good events to permanent causes (rather than temporary causes) facilitates post merger integration. Neural network predicts (n=1075 ) merger outcome with 91% accuracy – neural network used optimism and explanatory style as input variables.This research brings out the importance of optimism audit as essential and useful practice while undertaking M&A