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CEO preferences and acquisitions

Jenter, Dirk and Lewellen, Katharina (2015) CEO preferences and acquisitions. Journal of Finance. ISSN 0022-1082

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Identification Number: 10.1111/jofi.12283

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: http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information: © 2015 American Finance Association
Divisions: Finance
Subjects: H Social Sciences > HG Finance
Sets: Departments > Finance
Date Deposited: 12 Nov 2015 15:40
Last Modified: 20 Jul 2019 02:03
URI: http://eprints.lse.ac.uk/id/eprint/64422

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