Scholars from multiple fields have shown increasing interest in the causes and consequences of mergers and acquisitions (M&A). Although this proliferation of research has the potential to significantly improve our understanding of M&A activity, absent is the necessary step of consolidating and integrating extant knowledge. Accordingly, this article develops a framework to organize and review recent empirical findings, principally from management, economics, and finance in which interest in acquisition behavior is high but also from other areas that have tangentially explored acquisition activity such as accounting and sociology. This article identifies patterns and theoretical gaps and provides recommendations for future research aimed at developing a more integrated M&A research agenda for management scientists.

We examine the influence of CEO equity-based compensation on strategic risk taking by the firm. Building off the Behavioral Agency Model, Agency Theory, and Prospect Theory, we develop arguments about when equity-based compensation elements will increase or decrease executive risk propensity and, in turn, strategic risk taking. Incorporating a behavioral perspective into our models of incentive alignment provides us with new and potentially more accurate predictions about how individual elements of CEO pay will influence risk selection, as well as how equity compensation interacts with cash compensation and with other factors to influence risk preferences. In general, this study provides evidence that CEO equity-based compensation significantly influences strategic risk, but that this influence is more nuanced and complex than conventional treatments of executive compensation assume. In particular, we find that different forms of equity-based pay exhibit dissimilar influences on strategic risk and that their influence changes as their value and vesting status change. Second, we find that cash-based forms of pay moderate the incentive properties of equity-based pay, indicating that cash-based pay may affect how executives perceive risks associated with equity pay. Finally, we find that stock price volatility and board actions each also moderate the incentive effects of equity-based pay. In sum, our results argue for increased recognition of a behavioral perspective on executive compensation and greater precision in how we measure and model the incentive alignment properties of CEO compensation.

Regulatory focus theory proposes that decision-making and goal pursuit occur via either a promotion focus (a sensitivity to gains and a desire for advancement and growth) or a prevention focus (a sensitivity to losses and a desire for stability and security). Recent theorizing in strategic management research suggests that there may be important firm-level outcomes influenced by the regulatory focus of top executives. We expand research on regulatory focus theory by testing whether or not CEO regulatory focus impacts the proclivity of firms to undertake acquisitions. Furthermore, regulatory focus theory suggests that the effects of people's promotion and prevention foci are magnified when their regulatory focus is congruent with salient situational characteristics, a phenomenon known as regulatory fit. As a test of this idea, we demonstrate how the effects of CEO promotion and prevention foci are differentially impacted by one such characteristic, namely incentive compensation. Our findings indicate that CEO regulatory focus impacts both the quantity and scale of acquisitions undertaken by a firm. We also find support for our arguments that these relationships are moderated by stock option pay.

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