The Value of CEOs’ Industry Expertise - Evidence from Mergers & Acquisitions∗
نویسندگان
چکیده
We quantify the value of CEO industry-specific experience by using diversifying mergers and acquisitions announcements. In general, we find that industry experienced CEOs add value for their shareholders. The abnormal return is between 1.0% and 1.3% higher when the acquirer’s CEO has top management experience in the target’s industry. Analyzing potential mechanisms, we provide evidence that CEOs with industry experience in the target’s industry negotiate better terms and that this experience is particularly valuable in environments of high informational asymmetries (1.6% 2.9%). The results also suggest that certain skills of CEOs are neither completely general nor firm-specific but rather specific to an industry.
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