Superstar CEOs and Super Acquisitions

Weisu Yu, Craig Wilson

Research

39 Pages

The authors investigate how winning a “Best Chief Executive Officer (CEO) award” affects their propensity to undertake mergers and acquisitions (M&As). Their results suggest that award-winning CEOs are more likely to undertake M&As over the three years following the award announcement, compared to otherwise equivalent non-award winning CEOs.

Key Takeaways

M&A Types: Award-winning CEOs also undertake more M&As, and those they do undertake tend to be riskier. In particular, award-winning CEOs are more likely to undertake cross-border and cross-industry M&As, and of the cross-border M&As they do, the targets are more likely to be in countries that do not have common law legal systems or have English as an official language.
Timeframe: The effects are strongest in the two and three years following from when a CEO wins their first award.
Social Status: These results reveal that the social status a CEO gains from winning a best CEO award plays an important role in explaining their firm’s merger and acquisition decisions.
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