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CEO traders and corporate acquisitions

Author

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  • Leung, Henry
  • Tse, Jeffrey
  • Westerholm, P. Joakim

Abstract

This paper investigates whether the personal trading decisions of CEOs are related to their corporate acquisition decisions. We find that the personal trading performance of CEOs across all stocks they trade is significantly and positively related to the short-term performance of their mergers, and that CEOs exhibiting greater turnover on their personal common equity portfolios undertake acquisitions more frequently. Hence, a CEO's risk aversion, confidence and capability are consistent across their personal and corporate investment decisions.

Suggested Citation

  • Leung, Henry & Tse, Jeffrey & Westerholm, P. Joakim, 2019. "CEO traders and corporate acquisitions," Journal of Corporate Finance, Elsevier, vol. 54(C), pages 107-127.
    • Handle: RePEc:eee:corfin:v:54:y:2019:i:c:p:107-127
    DOI: 10.1016/j.jcorpfin.2017.09.013
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