Séminaire KTO-GREDEG-OFCE - Francesco Castellaneta (Catolica-Lisbon)

"The Disadvantage of Incomplete Feedback: Evidence from Private Equity-Backed Buyouts"
Quand ? Le 01-12-2016,
de 14:00 à 15:30
Où ? Salle Picasso, GREDEG
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Francesco Castellaneta (Catolica-Lisbon)


"The Disadvantage of Incomplete Feedback: Evidence from Private Equity-Backed Buyouts"


Abstract: We develop and test a theory of how organizations learn from performance feedback in the context of strategic decisions, where delayed outcomes result in feedback that is incomplete. In this context, firms facing a focal decision observe performance feedback for only a subset of their previous decisions. Using a sample of 7,223 private equity buyout investments, we find that incomplete feedback on past decisions has a negative influence on the performance of a subsequent decision. Our results also suggest that incomplete feedback creates challenges when firms engage in problemistic search, reducing the well-established benefits of search for firm future performance. Moreover, this mitigating effect of incomplete feedback is stronger when performance falls below rather than exceeds aspirations.


Joint work with Oliver Gottschalg (HEC School of Management - Paris), Aleksandra (Olenka) Kacperczyk (MIT Sloan School of Business - Boston) & Mike Wright (Imperial College Business School and University of Ghent - London).