Abstract:
We explore the role of target CEO self-interest on acquisition outcomes. Specifically, we apply the behavioral agency’s concept of agent risk bearing and the theory of inter-temporal choice to examine the target CEO’s effect on acquisition premium decisions. We refine knowledge with regard to antecedents of acquisition premiums by developing theory pertaining to the target CEO’s incentive to negotiate for higher premiums depending on their equity risk bearing. We tested our theory using a sample of 454 US domestic acquisitions from 1994 to 2013.
