Do Envious CEOs Cause Merger Waves?

Posted: 1 Feb 2010

See all articles by Anand M. Goel

Anand M. Goel

Stevens Institute of Technology

Anjan V. Thakor

Washington University, Saint Louis - John M. Olin School of Business; European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2009

Abstract

We develop a theory which shows that merger waves can arise even when the shocks that precipitated the initial mergers in the wave are idiosyncratic. The analysis predicts that the earlier acquisitions produce higher bidder returns, involve smaller targets, and result in higher compensation gains for the acquirer's top management team than the later acquisitions in the wave. We find strong empirical support for these predictions. The model also generates additional predictions, some of which remain to be tested.

JEL Classification: G34

Suggested Citation

Goel, Anand Mohan and Thakor, Anjan V., Do Envious CEOs Cause Merger Waves? (November 2009). The Review of Financial Studies, Vol. 23, Issue 2, pp. 487-517, 2009. Available at SSRN: https://ssrn.com/abstract=1544188 or http://dx.doi.org/hhp088

Anand Mohan Goel (Contact Author)

Stevens Institute of Technology ( email )

Hoboken, NJ 07030
United States

HOME PAGE: http://www.anandgoel.org

Anjan V. Thakor

Washington University, Saint Louis - John M. Olin School of Business ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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