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CEO personality traits and corporate value implication of acquisitions

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

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.

Suggested Citation

  • Aabo, Tom & Hanousek, Jan & Pantzalis, Christos & Park, Jung Chul, 2023. "CEO personality traits and corporate value implication of acquisitions," Journal of Empirical Finance, Elsevier, vol. 73(C), pages 86-106.
    • Handle: RePEc:eee:empfin:v:73:y:2023:i:c:p:86-106
    DOI: 10.1016/j.jempfin.2023.05.006
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    More about this item

    Keywords

    Behavioral corporate finance; Corporate acquisitions; CEO personality traits;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G40 - Financial Economics - - Behavioral Finance - - - General

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