A Safe Pair of Hands? CEO Career Experience and Acquisition Performance

Event Date: 10 March 2021

Speaker: Timothy King (University of Kent)

Time : 2pm

Abstract

We use the staggered deregulation of interstate banking in the U.S. to show that CEOs who have gained career experience at multiple banks are more likely to seek external growth via acquisitions. Following shocks to industry competition, acquisitions completed by CEOs with managerial experience across different banks perform better. Analysing the source of these acquisition gains, we demonstrate that CEOs with greater across-bank experience increase shareholder value by acquiring targets with greater asset dissimilarity from their bank and targets that are less risky. Our findings cannot be explained by other formative CEO experiences identified in prior literature or a CEO’s general ability. Our findings highlight the role of internally- versus externally-acquired experience in explaining how managers respond to a competitive shock

Published: 10 March 2021