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CEO personality traits and corporate value implication of acquisitions

Tom Aabo, Jan Hanousek, Christos Pantzalis and Jung Chul Park

Journal of Empirical Finance, 2023, vol. 73, issue C, 86-106

Abstract: We investigate how CEO personality traits moderate the shareholder value creation from corporate acquisitions. First, we document that the likelihood of corporate acquisitions is positively associated with extravert and overconfident CEOs consistent with the evidence of prior literature. Second, and most importantly, we document that stock prices react positively to acquisitions undertaken by conscientious CEOs. This finding is in line with the view that the stock market favors the detailed and planned approach towards acquisitions of conscientious CEOs. Furthermore, stock prices react positively to acquisitions undertaken by extraverted and overconfident CEOs but only after a good prior corporate performance stretch. Our results illustrate that CEO traits are important for the value implication of corporate acquisitions.

Keywords: Behavioral corporate finance; Corporate acquisitions; CEO personality traits (search for similar items in EconPapers)
JEL-codes: G34 G40 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:73:y:2023:i:c:p:86-106

DOI: 10.1016/j.jempfin.2023.05.006

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Journal of Empirical Finance is currently edited by R. T. Baillie, F. C. Palm, Th. J. Vermaelen and C. C. P. Wolff

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