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Time to complete the due diligence phase in mergers and acquisitions: impact of CEO psychological characteristics

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  • Viswa Prasad Gada
  • Manish Popli
  • Shavin Malhotra

Abstract

The CEO is the chief decision-maker with regard to corporate strategy, and extant literature highlights how CEOs’ psychological characteristics inform firms’ risky strategic choices. In this article, we focus instead on how CEOs’ psychological characteristics might lead to risk-mitigation actions. Building on the regulatory focus theory, we investigate the impact of CEO’s prevention focus on the due diligence process in merger and acquisition (M&A) deals. Using a sample of 339 majority-stake completed M&A deals by public firms from the United Kingdom, we find that CEOs having a stronger prevention focus increases the time these firms take to complete their M&A deals. We also find that this effect is mitigated when firms acquire target firms in related industries.

Suggested Citation

  • Viswa Prasad Gada & Manish Popli & Shavin Malhotra, 2021. "Time to complete the due diligence phase in mergers and acquisitions: impact of CEO psychological characteristics," Applied Economics, Taylor & Francis Journals, vol. 53(50), pages 5812-5825, October.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:50:p:5812-5825
    DOI: 10.1080/00036846.2021.1931005
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    Cited by:

    1. Popli, Manish & Ahsan, Faisal Mohammad, 2024. "Springboarding and activity load: Constraints on managerial attention and dependency on advisory firms in cross-border acquisitions," Journal of International Management, Elsevier, vol. 30(2).
    2. Popli, Manish & Ahsan, Faisal M. & Mukherjee, Debmalya, 2022. "Upper echelons and firm internationalization: A critical review and future directions," Journal of Business Research, Elsevier, vol. 152(C), pages 505-521.

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