City Research Online

Abstract

This PhD thesis investigates whether shared ancestry and cultural heritage between Chief Executive Officers (CEOs) of bidding and target firms influences corporate merger and acquisition (M&A) outcomes. The overarching research question is: Does similarity in the ancestral origins of bidder and target CEOs impact M&A processes and performance? The empirical setting is US public company mergers. CEO ancestry is operationalized using surname analysis of data on historical passenger arrivals to the port of New York. The thesis examines effects of CEO ancestries on aspects of M&As such as acquisition premiums, shareholder returns, post-merger performance, and executive compensation. Results reveal that deals undertaken by CEOs of the same ancestry exhibit lower premiums, wealth destruction for acquiring shareholders, and declines in post-merger performance. Additional analysis shows CEOs are rewarded despite decreasing profitability after same-ancestry deals, and further tests reveal CEO pay components become less sensitive to performance. This demonstrates how shared ancestry between bidder and target CEOs may lead to rent extraction. Overall, the dissertation provides novel empirical evidence that executive ancestral origins significantly influence domestic US mergers. The results have theoretical and practical implications regarding the role of cultural identity in the upper echelons. This thesis contributes to literature examining CEO ancestry as an impactful factor for M&A, establishes cultural heritage as a driver of agency costs, and critiques prevailing cross-cultural measures. It underscores how the past continues to echo in the ways contemporary executives evaluate strategic opportunities based on cultural affinity and homophily.

Publication Type:	Thesis (Doctoral)
Subjects:	H Social Sciences H Social Sciences > HB Economic Theory
Departments:	School of Policy & Global Affairs > Economics School of Policy & Global Affairs > School of Policy & Global Affairs Doctoral Theses Doctoral Theses

Export

Downloads