GARROW, Nigel and AWOLOWO, Ifedapo (2022). Mergers and acquisitions and the CEO: tenure and outcomes. Corporate Board: role, duties and composition, 18 (1), 47-61. [Article]
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M&A.pdf - Published Version
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M&A.pdf - Published Version
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Abstract
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.
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