Governance, CEO Power, and Acquisitions
41 Pages Posted: 22 Jun 2007 Last revised: 18 Sep 2009
Date Written: September 14, 2009
We examine whether governance matters for acquisitions. Acquisitions are frequently beneficial to the CEO of the acquiring firm, but can often be value-destructive to acquirer shareholders and other stakeholders such as employees. We find that corporate governance does not appear to influence whether a firm will become an acquirer after controlling for CEO power, but superior governance is associated with greater relatedness between the target and acquirer. We also find that the effect of CEO power on a firm’s acquisition activity varies according to the source of that power. Our results suggest that the relationships between governance, CEO power, and acquisition activity are complex.
Keywords: Governance, CEO Power, Acquisitions
JEL Classification: G34, L20, G24, G31, G32
Suggested Citation: Suggested Citation