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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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Identification Number: 10.1111/jofi.12283


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:
Additional Information: © 2015 American Finance Association
Divisions: Finance
Subjects: H Social Sciences > HG Finance
Date Deposited: 12 Nov 2015 15:40
Last Modified: 20 Oct 2021 02:18

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