Do insider CFOs deliver better acquisition performance?

Mai Iskandar-Datta and Shriya Shekhar

Journal of Business Research, 2020, vol. 118, issue C, 240-252

Abstract: We document that acquirer firms with insider CFOs achieve superior industry-adjusted operating performance in the post-acquisition period relative to firms with outsider CFOs, utilizing a sample from 1994 to 2014. Unlike insider CEOs, we find that insider CFOs do not differ from outsider CFOs in the acquisition deal types they undertake. However, they achieve significantly higher factor productivity gains after the acquisition. Our analysis suggests that the ability to identify targets that can yield higher synergy gains and the ability to integrate the target within the firm are behind the superior post-acquisition returns of insider CFOs. Our results are robust to various time-windows and a range of robustness tests regarding model specification—such as including additional firm level controls, alternative performance measures, and controls for firm overconfidence and CFO education, overconfidence and pay.

Keywords: Insider; CFO; Mergers and Acquisitions; Factor Productivity (search for similar items in EconPapers)
JEL-codes: G30 G34 G40 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:118:y:2020:i:c:p:240-252

DOI: 10.1016/j.jbusres.2020.06.040

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