Mergers and acquisitions and the CEO: Tenure and outcomesDownload This Article
Nigel Garrow , Ifedapo Francis Awolowo
This work is licensed under a Creative Commons Attribution 4.0 International License.
Tenure is an important component of mergers and acquisitions (M&A) outcomes, as highlighted in this study and recent studies by Zhao (2022) and Bilgili, Calderon, Allen, and Kedia (2017). Research on top management teams (TMTs) has found that a good work relationship between senior managers enhances team cohesiveness, communication, and firm performance. This study explores the impact of the joint tenure of the chairperson and the CEO on M&A outcomes. We utilised the resource-based view (RBV), upper echelon theory, and season of tenure theory as theoretical lenses to explore joint tenure’s potential impact on M&A outcomes. Through a long-event window research methodology, which examines the cumulative abnormal returns to the acquirer’s shareholders for a period of three years following the completion date, this study found that the length of the period of joint tenure of the chairperson and CEO in acquiring firms was significantly positively correlated with the cumulative abnormal return (CAR) to acquiring firm shareholders during the three years following completion of an acquisition (CARB). Although this study has utilised 47 acquisitions in Australia from the period from 1990 up to the global financial crisis, our findings are quite revealing. They have contributed to the limited study on joint tenure.
Keywords: Mergers and Acquisitions, Top Management, Joint Tenure, Leadership and Performance
Authors’ individual contributions: Conceptualisation — N.G.; Resources — N.G. and I.F.A.; Writing — N.G. and I.F.A.; Supervision — N.G. and I.F.A.; Funding Acquisition — N.G.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: G0, G3, G4, M1
Published online: 06.07.2022
How to cite this paper: Garrow, N., & Awolowo, I. F. (2022). Mergers and acquisitions and the CEO: Tenure and outcomes. Corporate Board: Role, Duties and Composition, 18(1), 47–61. https://doi.org/10.22495/cbv18i1art4