Eyes on the prize: CEO and director retirement preferences and acquisitions

Abstract

We examine whether the age of CEOs and independent directors impacts the likelihood of receiving a successful takeover offer. First, we replicate and confirm the results of Jenter and Lewellen and find that retirement age CEOs (age 64-66) are more likely to receive successful takeover offers. Second, we extend their study by investigating the retirement preferences of independent directors. We find that the likelihood of receiving a successful takeover offer increases when a higher proportion of independent directors are at retirement age. This finding suggests that independent directors have similar retirement preferences to CEOs.

Spillover effects of CEO performance-induced removal on competitor CEOs' firms' financial policies

“…Following CEO performance-induced removal, CEOs of competitor firms will reinforce the motivation to convey positive short-run outcomes proxied by ROA in the immediate aftermath. Thus, the logic of the disciplinary effect of CEO performance-induced removal on other firms in the same industry in S&P-1500 listed firms is strongly supported in line with earlier studies (Wiersema and Zhang, 2011; Clout et al ., 2021). Removing a poorly performing CEO is a critical decision that triggers CEOs operating with the same peers to respond positively in the U.S. market to evade any potential threat of removal from office.…”

“…A better response can demonstrate their ability and defend their position, making it more likely. Therefore, such an event is expected to divert CEOs' policies to short-term performance, possibly reducing investments in long-term projects that could generate shareholder rental (Clout et al ., 2021). Our R&D spending findings require careful explanation.…”

Board governance of Strategic Change: An assessment of the literature and avenues for future research

“…Several studies examined the role of different types of board demography in different external change types (Bachmann & Spiropoulos, 2021; Clout et al., 2021). Furthermore, a large body of research examined the role of different board human and social capital in acquisitions (e.g., Greve & Zhang, 2017; Güner et al., 2008; Hilscher & Şişli‐Ciamarra, 2013; Masulis & Mobbs, 2011; McDonald et al., 2008).…”