De-commitment to losing strategic action: Evidence from the divestiture of poorly performing acquisitions

Mathew L.A. Hayward, Katsuhiko Shimizu

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72 Citations (Scopus)


We use a mental accounting framework to study the conditions in which CEOs de-commit to poorly performing acquisitions and so become more likely to divest them. We test this framework by contrasting the experiences of 68 firms that divested acquisitions with a control sample of 68 firms that did not divest their acquisitions. Consistent with the theory that we use to explain and predict de-commitment, our results suggest that poorly performing acquired units tend to be divested when executives can place them within 'attributional accounts' (i.e., accounts for the cause of the performance that do not incriminate them) and 'comprehensive accounts' (i.e., within the context of overall firm performance).

Original languageEnglish
Pages (from-to)541-557
Number of pages17
JournalStrategic Management Journal
Issue number6
Publication statusPublished - 1 Jun 2006
Externally publishedYes


  • Acquisitions and divestitures
  • De-commitment
  • Mental accounts

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