Effects of executive departures on the performance of acquired firms Academic Article uri icon

abstract

  • Using a sample of 96 acquisitions that occurred between 1980 and 1984, this study concludes that the departure of executives from acquired firms is harmful to post acquisition performance. The negative effects of departures of the highest ranking executives (such as CEOs, Presidents, and Chairmen) appear to be most severe. Acquisition relatedness, contrary to hypothesis, did not moderate the departure‐performance relationship. Finally we find that providing one or more executives with top management team status in the newly combined firm leads to better postacquisition performance. Our study implies that executives from acquired firms are an intrinsic component of the acquired firm's resource base, and that their retention is an important determinant of postacquisition performance. Our evidence supports the view that executives are important to postacquisition performance, and we believe that this evidence extends to other restructuring contexts as well. Copyright © 1993 John Wiley & Sons, Ltd.

author list (cited authors)

  • Cannella, A. A., & Hambrick, D. C.

citation count

  • 212

publication date

  • January 1993

publisher