CEO Initial Contract Duration and Corporate Acquisitions

• 成果类型: Article
• 署名作者: Chen, Guoli; Huang, Ronghong; Mei, Shunji; Tan, Kelvin Jui Keng
• 署名单位: INSEAD Business School; University of Queensland; University of Auckland; University of Adelaide
• 刊物名称: ORGANIZATION SCIENCE
• ISSN/ISSBN: 1047-7039
• DOI: 10.1287/orsc.2022.16493
• 发表日期: 2025
• 关键词: CEO contract; Mergers and Acquisitions; CEO succession; corporate strategy; corporate governance

摘要

We examine the organizational impact of CEO initial contract duration on corporate acquisitions. We argue that CEOs with shorter initial contract durations are more likely to experience time pressure. Consequently, they are more likely to manage time by engaging in corporate mergers and acquisitions (M&As) to achieve quick growth. In addition, these CEOs are more likely to engage in straightforward deals, acquiring targets that are private, divested, related, small, and using cash payment, because these types of transactions are quicker to complete, carry less risk, and generally come with good performance prospects. Using a sample of firms that underwent new CEO appointments between 1990 and 2017 and detailed employment contract data collected from SEC filings, we find strong support for our hypotheses. In addition, we apply UK corporate governance reform to CEO contract duration as an exogenous shock to show causal evidence of such relations. This study contributes to the literature on CEO contracts, corporate acquisitions, time management and strategic leadership.