CEO preferences and acquisitions

Jenter, Dirk ORCID: 0000-0003-4168-9329 and Lewellen, Katharina (2015) CEO preferences and acquisitions. Journal of Finance, 70 (6). 2813 - 2852. ISSN 0022-1082

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Abstract

This paper explores the impact of target CEOs’ retirement preferences on takeovers. Using retirement age as a proxy for CEOs’ private merger costs, we find strong evidence that target CEOs’ preferences affect merger activity. The likelihood of receiving a successful takeover bid is sharply higher when target CEOs are close to age 65. Takeover premiums and target announcement returns are similar for retirement-age and younger CEOs, implying that retirement-age CEOs increase firm sales without sacrificing premiums. Better corporate governance is associated with more acquisitions of firms led by young CEOs, and with a smaller increase in deals at retirement age.

Item Type:	Article
Official URL:	https://onlinelibrary.wiley.com/journal/15406261
Additional Information:	© 2015 American Finance Association
Divisions:	Finance
Subjects:	H Social Sciences > HG Finance
Date Deposited:	12 Nov 2015 15:40
Last Modified:	23 Mar 2025 18:45
URI:	http://eprints.lse.ac.uk/id/eprint/64422

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