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CEO tenure and mergers and acquisitions

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  • Zhou, Bing
  • Dutta, Shantanu
  • Zhu, Pengcheng

Abstract

In this study, we examine the relationship between CEO tenure and corporate mergers and acquisitions (M&A) performance. Using a large sample of 16,516 M&As in the United States between 1999 and 2015, we find that long-tenured CEOs tend to create more shareholder value than short-tenured CEOs in M&A deals. We also find that long-tenured CEOs are more likely to acquire private target firms and to make acquisitions in the same industries and the domestic market. Finally, we find that long-tenured CEOs receive higher compensation compared to the pre-acquisition period if they make better acquisitions.

Suggested Citation

  • Zhou, Bing & Dutta, Shantanu & Zhu, Pengcheng, 2020. "CEO tenure and mergers and acquisitions," Finance Research Letters, Elsevier, vol. 34(C).
    • Handle: RePEc:eee:finlet:v:34:y:2020:i:c:s1544612319301618
    DOI: 10.1016/j.frl.2019.08.025
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    Cited by:

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    2. Rachid Achbah, 2024. "Manager Characteristics and SMEs' Restructuring Decisions: In-Court vs. Out-of-Court Restructuring," Papers 2402.18135, arXiv.org.
    3. Azzam, Ala'a & Alhababsah, Salem, 2023. "Does age similarity between board chair and CEO matter for R&D investments? Evidence from China," Finance Research Letters, Elsevier, vol. 58(PD).
    4. Jiao Xue & Heng Fan & Zhanxun Dong, 2020. "Compensations of Top Executives and M&A Behaviors: An Empirical Study of Listed Companies," IJFS, MDPI, vol. 8(4), pages 1-13, October.
    5. Shuangyan Li & Anum Shahzadi & Mingbo Zheng & Chun-Ping Chang, 2022. "The impacts of executives’ political connections on interactions between firm’s mergers, acquisitions, and performance," Economic Change and Restructuring, Springer, vol. 55(2), pages 653-679, May.
    6. Zhou, Chensong & Zhang, Xiangzhi & Xiong, Lingyun & Chen, Chuanyong, 2023. "Merger and acquisition performance commitments and shareholding reductions," Finance Research Letters, Elsevier, vol. 57(C).
    7. Rachid Achbah, 2023. "Manager Characteristics and SMEs’ Restructuring Decisions: In-Court vs. Out-of-Court Restructuring," Post-Print hal-04279942, HAL.
    8. Simpson, Joseph J. & Sariol, Marcie, 2022. "Uncertainty, entrepreneurial orientation, and the pursuit of M&A: Managing the unpredictable," Journal of Business Research, Elsevier, vol. 142(C), pages 423-434.

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    More about this item

    Keywords

    CEO tenure; Mergers and acquisitions; Performance; Event study;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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