Skill Differences in Corporate Acquisitions
Journal of Corporate Finance, Volume 23, December 2013, Pages 166–181
Posted: 17 Nov 2008 Last revised: 20 Sep 2013
Date Written: June 28, 2009
Are there skill differences in mergers and acquisitions? To investigate this question, we focus on persistence in the performance of corporate acquirers. We find persistence only when successive deals occur under the same CEO and conclude that skill differences in acquisitions reside with the CEO, not with the firm as a whole. These differences are economically meaningful. An acquirer that was successful in its last deal and kept its CEO earns 1.02% more on its next deal than does a previously-unsuccessful firm that kept its CEO. This percentage difference is equivalent to a $175 million difference in value creation.
Keywords: Mergers and acquisitions, skill, persistence, CEO
JEL Classification: G34
Suggested Citation: Suggested Citation