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CEO Preferences and AcquisitionsDirk JenterLondon School of Economics; National Bureau of Economic Research (NBER); CEPR Katharina LewellenTuck School of Business at Dartmouth June 5, 2014 Rock Center for Corporate Governance at Stanford University Working Paper No. 105 Journal of Finance, Forthcoming Abstract: This paper explores the impact of target CEOs’ retirement preferences on takeovers. Using retirement age as proxy for CEOs’ private merger costs, we find strong evidence that target CEOs’ preferences affect merger activity. The likelihood of receiving a successful takeover bid is sharply higher when target CEOs are close to age 65. Takeover premiums and target announcement returns are similar for retirement-age and younger CEOs, implying that retirement-age CEOs increase firm sales without sacrificing premiums. Better corporate governance is associated with more acquisitions of firms led by young CEOs, and with a smaller increase in deals at retirement age.
Number of Pages in PDF File: 48 Keywords: takeover bids, CEO retirement preferences and acquisitions, CEO early retirement on merger JEL Classification: G32, G34, G35 Date posted: December 8, 2011 ; Last revised: June 25, 2014Suggested CitationContact Information
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