Does CEO Acquisition-Selectivity Skill Matter to Firm Value?

56 Pages Posted: 1 Nov 2018

See all articles by Leonidas G. Barbopoulos

Leonidas G. Barbopoulos

University of Edinburgh

John A. Doukas

Old Dominion University - Strome College of Business

Date Written: October 27, 2018

Abstract

This paper investigates whether and how CEO acquisition-selectivity skill differences have significant cross-sectional effects on firm value. We document that CEO acquisition-selectivity skill and firm performance are diverse in the cross-section of acquiring firms. CEOs with low acquisition-selectivity skill, about 49% of our sampled deals, experienced significant negative abnormal returns. On the contrary, CEOs with exceptional acquisition-selectivity skill (20%) created not only the highest abnormal returns by carrying out positive NPV acquisitions but also significantly raised the long-term efficiency gains of acquiring firms. Our results are robust to several endogeneity concerns including an analysis of exogenous CEO departures to other firms and CEO sudden deaths.

Keywords: CEO acquisition selectivity skill, corporate takeovers, abnormal returns, post-merger efficiency gains, investment (in)efficiency

JEL Classification: G14, G32, G34

Suggested Citation

Barbopoulos, Leonidas G. and Doukas, John A., Does CEO Acquisition-Selectivity Skill Matter to Firm Value? (October 27, 2018). Available at SSRN: https://ssrn.com/abstract=3273698 or http://dx.doi.org/10.2139/ssrn.3273698

Leonidas G. Barbopoulos

University of Edinburgh ( email )

University of Edinburgh Business School
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
United Kingdom

John A. Doukas (Contact Author)

Old Dominion University - Strome College of Business ( email )

2080 Constant Hall
Suite 2080
Norfolk, VA 23529-0222
United States
757-683-5521 (Phone)

HOME PAGE: http://www.efmaefm.org/0DOUKAS/doukas.php

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