CEO Educational Background and Acquisition Targets Selection
49 Pages Posted: 12 Aug 2019
Date Written: August 8, 2018
Using hand-collected CEO education data of 3574 CEOs over the period of 2000 to 2015, we document that CEOs are significantly more likely to acquire targets that are headquartered in those states where the CEOs received their undergraduate and graduate degrees. Education-state deals are larger, have higher completion rates, and exist with both public and private targets. Acquirers pay a lower target premium for education-state deals and the cumulative abnormal announcement returns are positive. The combined evidence suggests that education-state acquisitions are more likely to be driven by bidder CEO's information advantage toward firms headquartered in the education state.
Keywords: CEO educational background, Mergers and acquisitions, Familiarity bias
JEL Classification: G02, G34, I2, M12
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