2003
DOI: 10.2139/ssrn.444360
|View full text |Cite
|
Sign up to set email alerts
|

CEO Turnover after Acquisitions: Do Bad Bidders get Fired?

Abstract: Previous research has documented that the external control market disciplines managers who make valuereducing acquisitions. This paper finds that internal control mechanisms also discipline managers who make value-destroying acquisitions. We find a strong inverse relation between the returns to acquiring firms and the likelihood that their CEOs are subsequently fired. No significant relation exists between the probability that "bad bidders" get fired and various corporate governance characteristics, including … Show more

Help me understand this report

Search citation statements

Order By: Relevance

Paper Sections

Select...
1
1
1
1

Citation Types

5
27
0

Year Published

2009
2009
2017
2017

Publication Types

Select...
6

Relationship

0
6

Authors

Journals

citations
Cited by 40 publications
(32 citation statements)
references
References 39 publications
5
27
0
Order By: Relevance
“…Although investment banks often play an advisory role in important phases of the acquisition, the ultimate responsibility for the acquisition valuation process and the final investment decision rests with the acquirer's management. This view is supported by prior research (Lehn and Zhao 2006), which shows that the acquirer's manager experiences elevated turnover probabilities following poor acquisitions.…”
supporting
confidence: 59%
See 1 more Smart Citation
“…Although investment banks often play an advisory role in important phases of the acquisition, the ultimate responsibility for the acquisition valuation process and the final investment decision rests with the acquirer's management. This view is supported by prior research (Lehn and Zhao 2006), which shows that the acquirer's manager experiences elevated turnover probabilities following poor acquisitions.…”
supporting
confidence: 59%
“…Following a large body of prior research (e.g., Asquith, Bruner, and Mullins 1983;Jensen and Ruback 1983;Lehn and Zhao 2006;Masulis et al 2007; Francis and Martin 2010), we use the stock return around the acquisition announcement to proxy for the quality of the investment decision. This approach assumes that the market incorporates information in stock prices efficiently, so that the announcement return is an unbiased estimate of the impact of an acquisition on the wealth of acquiring-firm shareholders (Moeller, Schlingemann, and Stulz 2004).…”
Section: Corporate Acquisition Announcement Return Analysismentioning
confidence: 99%
“…In total, it appears that CCAR is properly measuring the change in shareholder wealth of the observations. Lehn and Zhao (2006) study the relationship between acquisition performance and CEO turnover. Their results show that top executives are more likely to be replaced in firms that make bad bids.…”
Section: Validity Of Ccarmentioning
confidence: 99%
“…A firm is assigned to a size quintile based on the level of sales reported at the end of the fiscal year immediately following the last acquisition. More specifically, the quintiles are calculated separately in each of the 3 In comparison, Lehn and Zhao (2006) observe acquirers for five years after the first acquisition. 4 Much of the analysis in this paper was replicated using the dollar change in shareholder wealth, rather than the percent change.…”
Section: Introductionmentioning
confidence: 99%
“…Offenberg (2009-this issue) draws inspiration from the findings of Moeller et al (2004) and returns to a question first posed by Mitchell and Lehn (1990) and Lehn and Zhao (2006). In particular, Offenberg notes the evidence from Moeller et al (2004) pointing to wealth destruction being concentrated in large acquisitions.…”
Section: Who's Afraid Of the Big Bad Bidder?mentioning
confidence: 99%