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CEO age and entry timing within industry merger waves: Evidence from China

Author

Listed:
  • Xi Zhao

    (Tianjin University)

  • Meiling Tang

    (Tianjin University)

Abstract

A firm’s entry timing within merger waves matters, as early movers outperform later ones. However, the managerial characteristics that facilitate early or late participation in merger waves remain unknown. We draw on the cognitive filtering mechanisms to investigate how CEO age influences entry timing within industry merger waves. Our findings suggest that CEO youth is associated with early action in merger waves: a firm with a CEO who is 10 years younger is 16.53% more likely to become an early mover in merger waves. The age effect cannot be attributed to the selection of younger CEOs by high-risk firms, nor to other age-related CEO characteristics. Younger CEOs also prefer to complete acquisitions faster by using all-cash payments to maintain early-mover advantages. By acting earlier and faster in merger waves, younger CEOs are found to significantly improve acquisition performance and produce strategic synergy. This paper underscores the importance of CEOs’ personal characteristics for corporate strategic decisions in merger waves.

Suggested Citation

  • Xi Zhao & Meiling Tang, 2023. "CEO age and entry timing within industry merger waves: Evidence from China," Asia Pacific Journal of Management, Springer, vol. 40(2), pages 517-552, June.
    • Handle: RePEc:kap:asiapa:v:40:y:2023:i:2:d:10.1007_s10490-021-09796-4
    DOI: 10.1007/s10490-021-09796-4
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