McCombs TODAY

July 22 update: Forbes adds to the media coverage of Graebner’s research.

The New York Times, June 24, 2009

Are sellers at a disadvantage in corporate acquisitions? New research from McCombs Assistant Professor of Management Melissa Graebner (left) shows sellers in corporate acquisitions are more trusting than buyers, and that buyers’ may use their lack of trust to justify deceptive practices. The New York Times DealBook blog reports on Graebner’s study:

“Sellers tend to eliminate partners they distrust, while buyers did not,” the study’s author, Melissa Graebner of the University of Texas at Austin, said. “So this creates a fundamental asymmetry in which most sellers trust their buyers, but most buyers distrust their sellers.”

Meanwhile, executives who believe themselves skilled at discerning the trustworthiness or trustfulness of a potential buyer or seller turn out to be wrong almost as often as they are right, according to the study, titled “Caveat Venditor: Trust Asymmetries in Acquisitions of Entrepreneurial Firms.”

“Firms’ assessments of whether they were trusted by their counterparts were frequently mistaken,” the study finds. “This was particularly true for sellers, who often believed they were trusted by their buyers when the opposite was true.”

The study shows that buyers are instantly on the defensive and fear that they are being taken advantage of. “Psychological research suggests that a fear of exploitation provides a moral justification for deception,” Professor Graebner writes. “Facing the combined forces of temptation and fear,” the buyer’s “leaders engaged in material deception.”

Such material deception includes misleading sellers about post-integration plans like layoffs, relocation of personnel, changes in strategic direction or diminished roles for senior managers, the study finds.

Read the full New York Times article, “Sellers Beware: Study Finds Distrust in Buyers.”

Academy of Management press release.