Bernhard Schwetzler, Johannes Reusche

• We address the consequences of unrealized corporate iestments by examining how unconsummated M&As affect subsequent takeovers. Acquirers that have experienced failed deals choose targets considerably smaller than their average target chosen before, are less likely to make in-house deals and use more M&A advisors. They are more likely to make cash and toehold bids, and less likely to bid when M&A activity is high. Effects are strongest for takeovers directly succeeding failed deals, but linger over time and with CEOs. We argue that firms and CEOs attempt to reduce deal risk to protect their reputation for assessing and consummating iestments and consistently find negative stock price reactions to repeat deal failure. If too extensive, this behavior is costly as indicated by lower abnormal returns when firms with failure experience announce low-risk M&As.