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CEO educational background and acquisition targets selection

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  • Wang, Ye
  • Yin, Sirui

Abstract

Using hand-collected CEO education data of 3574 CEOs over the period of 2000 to 2015, we document that CEOs are significantly more likely to acquire targets that are headquartered in those states where the CEOs received their undergraduate and graduate degrees. Education-state deals are larger, have higher completion rates, and exist with both public and private targets. Acquirers pay a lower target premium for education-state deals and the cumulative abnormal announcement returns are positive. The combined evidence suggests that education-state acquisitions are more likely to be driven by bidder CEO's information advantage toward firms headquartered in the education state.

Suggested Citation

  • Wang, Ye & Yin, Sirui, 2018. "CEO educational background and acquisition targets selection," Journal of Corporate Finance, Elsevier, vol. 52(C), pages 238-259.
    • Handle: RePEc:eee:corfin:v:52:y:2018:i:c:p:238-259
    DOI: 10.1016/j.jcorpfin.2018.08.013
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    3. Joonho Moon & Won Seok Lee & Jimin Shim, 2022. "Chief Executive Officers and the Value of US Airlines: The Moderating Effect of Carrier Type," Sustainability, MDPI, vol. 14(13), pages 1-12, June.
    4. Basnet, Anup & Davis, Frederick & Walker, Thomas & Zhao, Kun, 2021. "The effect of securities class action lawsuits on mergers and acquisitions," Global Finance Journal, Elsevier, vol. 48(C).
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    6. Renneboog, Luc & Vansteenkiste, Cara, 2019. "Failure and success in mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 650-699.
    7. Ding, Haoyuan & Hu, Yichuan & Li, Chang & Lin, Shu, 2021. "CEO country-specific experience and cross-border mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 69(C).
    8. Kyung Yoon Kwon & Philip Molyneux & Livia Pancotto & Alessio Reghezza, 2024. "Banks and FinTech Acquisitions," Journal of Financial Services Research, Springer;Western Finance Association, vol. 65(1), pages 41-75, February.
    9. Renneboog, Luc & Vansteenkiste, Cara, 2019. "Failure and success in mergers and acquisitions," Other publications TiSEM 9baa3ffc-67cb-4647-9da5-a, Tilburg University, School of Economics and Management.
    10. Shahid Ali & Muhammad Akram Naseem & Junfeng Jiang & Ramiz Ur Rehman & Fizzah Malik & Muhammad Ishfaq Ahmad, 2022. "“How†and “When†CEO Duality Matter? Case of a Developing Economy," SAGE Open, , vol. 12(3), pages 21582440221, August.
    11. Shuangyan Li & Anum Shahzadi & Mingbo Zheng & Chun-Ping Chang, 2022. "The impacts of executives’ political connections on interactions between firm’s mergers, acquisitions, and performance," Economic Change and Restructuring, Springer, vol. 55(2), pages 653-679, May.
    12. Zhu, Zhaobo & Qi, Zhenyan & Jin, Yi, 2023. "Familiarity bias and economic decisions: Evidence from a survey experiment," Economics Letters, Elsevier, vol. 229(C).
    13. Wafa Tariq Waqar, 2020. "Board size and acquisition outcome: The moderating role of home country formal institutional development," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(4), pages 529-541, June.
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    More about this item

    Keywords

    CEO educational background; Mergers and acquisitions; Familiarity bias;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • I2 - Health, Education, and Welfare - - Education
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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