Learning to Negotiate Takeovers? The Role of Target CEO Experience

70 Pages Posted: 10 Nov 2016 Last revised: 6 Feb 2017

See all articles by Gennaro Bernile

Gennaro Bernile

University of Miami - Department of Finance

Mengyao Kang

Singapore Management University - Lee Kong Chian School of Business

Date Written: November 10, 2016

Abstract

Does a CEO’s experience with mergers matter when her firm becomes a takeover target? We find that shareholders receive higher premiums when their CEO has experience. The evidence suggests this is due to learning rather than innate skills or selection. Consistent with superior negotiation of salient features of takeover offers, experienced target CEOs obtain either safer cash payments or higher premiums as the fraction of cash in the offer decreases. These benefits do not come at the cost of other contractual concessions or inefficiencies in takeover negotiations. Overall, M&A experience is valuable when the CEO’s firm becomes a takeover target.

Keywords: Learning, CEO Experience, Premium, Payment Method, Mergers & Acquisitions

JEL Classification: D83, G30, G34

Suggested Citation

Bernile, Gennaro and Kang, Mengyao, Learning to Negotiate Takeovers? The Role of Target CEO Experience (November 10, 2016). Asian Finance Association (AsianFA) 2017 Conference. Available at SSRN: https://ssrn.com/abstract=2867505 or http://dx.doi.org/10.2139/ssrn.2867505

Gennaro Bernile (Contact Author)

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

Mengyao Kang

Singapore Management University - Lee Kong Chian School of Business ( email )

50 Stamford Road
singapore, 178899
Singapore

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