CEO-CFO Educational Ties and Mergers and Acquisitions

44 Pages Posted: 18 Jul 2019

See all articles by Francois Belot

Francois Belot

Université de Cergy-Pontoise

Timothée Waxin

Léonard de Vinci Pôle Universitaire

Date Written: July 18, 2019


This paper analyzes the social connections between a firm’s chief executive officer (CEO) and its chief financial officer (CFO). We focus on French educational networks and examine the corporate governance and performance of firms whose CEO and CFO attended the same elite college (Grande école). Given the strong involvement of CEOs and CFOs in the takeover process, we investigate acquisition policies and observe that strong social ties within the top management team are associated with higher acquisitiveness and lower returns for bidder shareholders. These results are consistent with excessive managerial homogeneity reducing CEO monitoring and reinforcing decisional biases such as overconfidence. We find that CEOs are more likely to choose socially connected CFOs when CEOs are more powerful and are employed at firms with lower board monitoring. We also show that CEOs are less likely to be fired when the firms’ CFOs are drawn from the same network. These results suggest that social connections within executive committees come at the cost of CEO entrenchment and corporate governance failures.

Keywords: CEO, CFO, Acquisitiveness, Bidder returns, Mergers and acquisitions, Entrenchment, CEO turnover, CFO board membership

JEL Classification: G32, G34

Suggested Citation

Belot, Francois and Waxin, Timothée, CEO-CFO Educational Ties and Mergers and Acquisitions (July 18, 2019). Available at SSRN: or

Francois Belot (Contact Author)

Université de Cergy-Pontoise ( email )

33 boulevard du Port
Cergy-Pontoise Cedex, 95011
+33 1 34 25 62 33 (Fax)

Timothée Waxin

Léonard de Vinci Pôle Universitaire ( email )


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