Do They Walk the Talk? Gauging Acquiring CEO and Director Confidence in the Value Creation Potential of Announced Acquisitions Academic Article uri icon

abstract

  • We explore whether acquiring CEOs and directors act consistently with the idea that their newly announced acquisitions will increase long-term firm value. Specifically, we examine postannouncement adjustments to CEOs' equity-based holdings and find acquiring CEOs tend to exercise options and sell firm stock following acquisition announcements. Moreover, positive short-term market performance exacerbates this effect. Further, we find directors tend to grant their acquiring CEOs stock options, after acquisition announcement, presumably to more tightly align CEO-shareholder interests. These findings suggest that when CEOs and directors manage acquiring CEOs' equity-based holdings, they do not appear to anticipate long-term value creation from their acquisitions.

published proceedings

  • Academy of Management Journal

altmetric score

  • 10

author list (cited authors)

  • Devers, C. E., McNamara, G., Haleblian, J., & Yoder, M. E.

citation count

  • 34

complete list of authors

  • Devers, Cynthia E||McNamara, Gerry||Haleblian, Jerayr||Yoder, Michele E

publication date

  • December 2013