CEO network centrality and merger performance

• 成果类型: Article
• 署名作者: El-Khatib, Rwan; Fogel, Kathy; Jandik, Tomas
• 署名单位: Zayed University; University of Arkansas System; University of Arkansas Fayetteville
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2015.01.001
• 发表日期: 2015
• 页码: 349-382
• 关键词: Network centrality; Mergers and Acquisitions; corporate governance; Corporate control market; Managerial labor market

摘要

We study the effects on M&A outcomes of CEO network centrality, which measures the extent and strength of a CEO's personal connections. High network centrality can allow CEOs to efficiently gather and control private information, facilitating value-creating acquisition decisions. We show, however, that M&A deals initiated by high-centrality CEOs, in addition to being more frequent, carry greater value losses to both the acquirer and the combined entity than deals initiated by low-centrality CEOs. We also document that high-centrality CEOs are capable of avoiding the discipline of the markets for corporate control and the executive labor market, and that the mitigating effect of internal governance on CEO actions is limited. Our evidence suggests that corporate decisions can be influenced by a CEO's position in the social hierarchy, with high-centrality CEOs using their power and influence to increase entrenchment and reap private benefits. (C) 2015 Elsevier B.V. All rights reserved.