The Influence of CEO Characteristics on Takeover Activity

Chirkowski, Adam (2008) The Influence of CEO Characteristics on Takeover Activity. [Dissertation (University of Nottingham only)] (Unpublished)

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Abstract

There is a large body of literature which seeks to explain the motives for takeover activity in the modern corporation, suggesting that it can be condensed to three factors; Agency, Synergy and Hubris. There is an even larger body of evidence which suggests such takeover activity is detrimental to the shareholder value of firms which partake in it, and therefore questions arise as to why such decisions are taken

Some attention has been given to the influence that the characteristics of teams of top managers by the nature of their diversity have on corporate strategic change by the likes of Wiersema & Bantel (1997). My research is more focused on the single individual at the top, the CEO: whether they are as influential as they historically have been, and whether their different, observable, background characteristics influence the firms they control, specifically the decision to expand externally through Merger & Acquisition (M&A) activity. Therefore the research question I set out to answer is;

Do CEO characteristics influence the takeover activity of the firms they run?

Research into this question will have implications over a range of corporate decisions, including selection of an appropriate candidate in alignment with the desired strategy, design of remuneration packages to best tie the interests of the CEO with the interests of the shareholders, and necessary levels of monitoring for effective corporate governance.

In seeking to answer this question, I compiled data on CEOs of the constituent firms which make up the FTSE 100, looking at five background characteristics; their age, experience, tenure as CEO, years spent with the firm, and whether or not they were internally hired, as well as compiling a list of acquisitions undertaken by the firms over the four year period 2004 �������¢���¢�������¬���¢�������� 2007.

Although some results were found to be significant after regression analyses, the majority of results indicated insignificant influence of the characteristics on takeover activity.

Item Type: Dissertation (University of Nottingham only)
Keywords: CEO, Takeover, M&A, Hubris
Depositing User: EP, Services
Date Deposited: 07 Jan 2009
Last Modified: 22 Oct 2016 20:00
URI: http://eprints.nottingham.ac.uk/id/eprint/22487

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