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

See all articles by Jeffrey F. Jaffe

Jeffrey F. Jaffe

University of Pennsylvania - Finance Department

David Pedersen

Rutgers School of Business-Camden

Torben Voetmann

The Brattle Group; University of San Francisco

Date Written: June 28, 2009

Abstract

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

Jaffe, Jeffrey F. and Pedersen, David and Voetmann, Torben, Skill Differences in Corporate Acquisitions (June 28, 2009). Journal of Corporate Finance, Volume 23, December 2013, Pages 166–181. Available at SSRN: https://ssrn.com/abstract=1301716 or http://dx.doi.org/10.2139/ssrn.1301716

Jeffrey F. Jaffe (Contact Author)

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
215-898-5615 (Phone)
215-898-6200 (Fax)

David Pedersen

Rutgers School of Business-Camden ( email )

227 Penn Street
Camden, NJ 08102
United States

Torben Voetmann

The Brattle Group ( email )

201 Mission Street
Suite 2800
San Francisco, CA 94105
United States
415-217-1000 (Phone)

HOME PAGE: http://www.brattle.com

University of San Francisco ( email )

2130 Fulton Street
San Francisco, CA 94117
United States

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