The effects of information systems compatibility on firm performance following mergers and acquisitions

What is it about?

When firms merge or when one firm acquires another firm, does it matter whether they have compatible information systems? We analyze data on operating cycle efficiency and audit delays, comparing acquirers who have the same information systems as their targets with acquirers who have different information systems as their targets. We find compatible information systems (target and acquirer have the same ERP system) result in faster operating cycles and shorter audit delays in comparison to incompatible information systems (target and acquirer have different ERP systems). Our results suggest that managers involved in mergers and acquisitions should explicitly consider the type of ERP system target firms use as they plan and execute the merger or acquisition.

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