Ready, set, go: CEO’S early tenure acquisitions & post-deal performance

Manjot S. Bhussar, Michelle L. Zorn, Aaron D. Hill and Ying Schwarte

Journal of Business Research, 2025, vol. 199, issue C

Abstract: New CEOs often pursue acquisitions early in their tenures; however, not all early deals lead to success. Integrating knowledge-based view and upper echelon’s theory, we examine how the timing of acquisitions in a new CEO’s early tenure affects post-deal performance. We theorize an inverted U-shaped relationship where waiting allows new CEOs to gain knowledge to improve post-acquisition performance. However, waiting too long causes post-deal performance declines due to knowledge stagnation and external pressures, prompting CEOs to undertake riskier acquisitions. We theorize that CEOs’ knowledge characteristics — from inside/outside origin, target industry, and prior acquisition — shapes this relationship. Using 2SLS analytical techniques, we test our predictions on data from 474 acquisitions initiated by new CEOs at U.S. public firms over a period of 15 years. We find that new CEO early tenure is curvilinearly related to post-deal performance and that CEOs’ prior firm and target industry knowledge moderates this relationship.

Keywords: New CEO; Acquisitions; Knowledge-based view; Post-deal performance; Strategic initiatives; Upper-echelons (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296325003807
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:199:y:2025:i:c:s0148296325003807

DOI: 10.1016/j.jbusres.2025.115557

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().