Do they walk the talk? Gauging acquiring CEO and director confidence in the value creation potencial of announced acquisitions.

• Autores: Cynthia E. Devers, Gerry McNamara, Jerayr Haleblian, Michele E. Yoder
• Localización: Academy of management journal, ISSN-e 0001-4273, Vol. 56, Nº 6, 2013, págs. 1679-1702
• Idioma: inglés
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• Resumen

  • We explore whether acquiring CEOs and directors act consistently with the idea that their newly announced acquisitions will increase long-term firm value. Specifically, we examine postannouncement adjustments to CEOs' equity-based holdings and find acquiring CEOs tend to exercise options and sell firm stock following acquisition announcements. Moreover, positive short-term market performance exacerbates this effect. Further, we find directors tend to grant their acquiring CEOs stock options, after acquisition announcement, presumably to more tightly align CEO-shareholder interests. These findings suggest that when CEOs and directors manage acquiring CEOs' equity-based holdings, they do not appear to anticipate long-term value creation from their acquisitions. [ABSTRACT FROM AUTHOR]