How Do CEOs Matter? The Effect of Industry Expertise on Acquisition Returns

• 成果类型: Article
• 署名作者: Custodio, Claudia; Metzger, Daniel
• 署名单位: Arizona State University; Arizona State University-Tempe; Stockholm School of Economics
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hht032
• 发表日期: 2013
• 页码: 2007
• 关键词: corporate; overconfidence; MARKET; IMPACT; driven; shocks

摘要

This paper shows how chief executive officer (CEO) characteristics affect the performance of acquirers in diversifying takeovers. When the acquirer's CEO has previous experience in the target industry, the acquirer's abnormal announcement returns are between 1.2 and 2.0 percentage points larger than those generated by a CEO who is new to the target industry. This outcome is driven by the industryexpert CEO's ability to capture a larger fraction of the merger surplus. Industryexpert CEOs typically negotiate better deals and pay a lower premium for the target. This effect is stronger when information asymmetry is high and in bilateral negotiations compared to auctions. We also find that industryexpert CEOs on average select lower surplus deals. This evidence is consistent with industryexpert CEOs having superior negotiation skills.