It does not. Both AI and player armies shatter, and noone teleports. They run away and you can follow them.
So let me get this straight. Let's say you have an army of 10k and defeat an army of 7k. After the battle you have 7k left and they have 3k. They now split into 3 armies of 1k each and head off into separate directions. Doesn't this just mean that you should now split your 7k into 3 and send each off after a different stack. Doesn't this just mean more chasing down and playing ping pong?