The role of CEO integrity in M&A decision‐making

Jan C. Hennig, Jan C. Bauer and Tomi Laamanen

Strategic Management Journal, 2026, vol. 47, issue 1, 39-72

Abstract: Research Summary While the influence of CEO characteristics on M&A decisions has long spurred researchers’ interest, little attention has been devoted to the ramifications of CEO integrity—the adherence to generally accepted norms and standards. We investigate how CEO integrity influences different stages of the M&A decision process. Specifically, we argue that while CEO integrity reduces self‐serving behavior, it may also become a golden cage that constrains CEOs’ latitude of action. Accordingly, we find that CEO integrity decreases the probability of Type I errors (errors of commission) but increases the probability of Type II errors (errors of omission) in M&A decision‐making. We contribute to theory development by putting forward CEO integrity as an important personality construct for upper echelons research to build on and extend further. Managerial Summary This paper examines how CEO integrity influences M&A decision‐making, providing key insights for corporate strategy. Analyzing data from S&P 1500 firms (2006‐2021), we find that CEOs with higher integrity are less likely to engage in frequent or large‐scale M&As, particularly avoiding cross‐border deals due to higher uncertainty and potential risks. High‐integrity CEOs also tend to pay lower acquisition premiums and take longer to complete deals, reflecting a cautious and thorough approach. While CEO integrity helps protect firms from costly mistakes it may also lead to missed growth opportunities, indicating a trade‐off between stakeholder considerations and strategic risk‐taking. Boards may need to tailor governance frameworks to optimize the balance between the benefits and constraints of CEO integrity.

Date: 2026
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https://doi.org/10.1002/smj.70019

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