Publication Type
Journal Article
Version
acceptedVersion
Publication Date
6-2021
Abstract
Research Summary: To address endogeneity concerns stemming from firm-CEO matching, we deploy a two-sided matching model that identifies the complementarities arising from the CEO-firm match and subsequently account for these complementarities in empirical tests. Applying this approach, we examine how the nature of CEOs' human capital affects the acquisition behavior and performance of firms. We find that generalist CEOs (CEOs with a broader set of knowledge and skills) are more likely to engage in unrelated acquisitions than specialist CEOs (CEOs with a narrower but deeper set of knowledge and skills). We also find that the fit between the nature of CEOs' human capital and the type of acquisitions they undertake is associated with stronger performance. Our paper contributes to research on CEOs, human capital, M&As, and microfoundations.
Managerial Summary: We deploy an empirical approach that takes into account the complementarities that arise from the matching of CEOs and firms when testing hypotheses on how CEO attributes shape firm outcomes. Based on this approach, our study finds that CEOs with a broader set of managerial knowledge and skills (generalist CEOs) are more likely to engage in unrelated acquisitions (acquisitions outside a firm's main industry) than CEOs with a narrower but deeper set of knowledge and skills that is more closely tied to a particular industry, firm, or domain (specialist CEOs). We also find that the fit between the nature of CEOs' human capital and the type of acquisitions they engage in is associated with stronger performance.
Keywords
acquisitions, CEOs, human capital, microfoundations, two-sided matching
Discipline
Accounting | Human Resources Management | Strategic Management Policy
Research Areas
Corporate Reporting and Disclosure
Publication
Strategic Management Journal
Volume
42
Issue
6
First Page
1184
Last Page
1214
ISSN
0143-2095
Identifier
10.1002/smj.3258
Publisher
Wiley
Embargo Period
5-19-2021
Citation
CHEN, Guoli; HUANG, Sterling; and MEYER-DOYLE, Philipp.
Generalist versus specialist CEOs and acquisitions: Two-sided matching and the impact of CEO characteristics on firm outcomes. (2021). Strategic Management Journal. 42, (6), 1184-1214.
Available at: https://ink.library.smu.edu.sg/soa_research/1887
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1002/smj.3258
Included in
Accounting Commons, Human Resources Management Commons, Strategic Management Policy Commons