Age Is Not Just a Number: A study on CEO age and the propensity to be acquired
Sammanfattning: In common finance theory, all CEOs should act the same - namely to maximize shareholder value. This thesis examines the likelihood of a firm being acquired conditional to the age of the target CEO. We further investigate whether a CEO board membership of the same firm has an impact on the analysis as well as if the pricing of takeover bids differ between age groups. With firm- and M&A-data on Swedish companies for the years 2002-2016, we employ logit and standard OLS regression models to test our hypotheses. We find strong evidence for a retirement-age effect, namely that the likelihood of being acquired is sharply higher for firms with CEOs in near retirement-age. This effect is amplified when the CEO gets extended control through a board seat. Our findings thus imply that target CEOs' self-interest has a substantial impact on companies' M&A-decisions and eventually on shareholder value.
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