Co-opted board and market reactions to acquisition announcements: the role of CEO characteristics
| Panel A: CEO age | ||||||
|---|---|---|---|---|---|---|
| YoungCEO | Old CEO | Young CEO | OldCEO | Young CEO | Old CEO | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0059* | −0.0083*** | ||||
| (−1.74) | (−3.20) | |||||
| NCO_OPT | −0.0006* | −0.0007*** | ||||
| (−1.83) | (−3.19) | |||||
| RCO_OPT | −0.0053 | −0.0075*** | ||||
| (−1.55) | (−2.92) | |||||
| CONSTANT | 0.0303 | −0.0117 | 0.0241 | −0.0174 | 0.0267 | −0.0164 |
| (1.14) | (−0.56) | (0.91) | (−0.82) | (1.00) | (−0.78) | |
| Chi-square difference | (0.07) | (0.06) | (0.00) | |||
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| R2 | 0.0481 | 0.0529 | 0.0481 | 0.0526 | 0.0480 | 0.0526 |
| N | 3,849 | 5,090 | 3,849 | 5,090 | 3,849 | 5,090 |
| Panel A: CEO age | ||||||
|---|---|---|---|---|---|---|
| YoungCEO | Old CEO | Young CEO | OldCEO | Young CEO | Old CEO | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0059* | −0.0083*** | ||||
| (−1.74) | (−3.20) | |||||
| NCO_OPT | −0.0006* | −0.0007*** | ||||
| (−1.83) | (−3.19) | |||||
| RCO_OPT | −0.0053 | −0.0075*** | ||||
| (−1.55) | (−2.92) | |||||
| CONSTANT | 0.0303 | −0.0117 | 0.0241 | −0.0174 | 0.0267 | −0.0164 |
| (1.14) | (−0.56) | (0.91) | (−0.82) | (1.00) | (−0.78) | |
| Chi-square difference | (0.07) | (0.06) | (0.00) | |||
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| 0.0481 | 0.0529 | 0.0481 | 0.0526 | 0.0480 | 0.0526 | |
| 3,849 | 5,090 | 3,849 | 5,090 | 3,849 | 5,090 | |
| Panel B: CEO vega | ||||||
|---|---|---|---|---|---|---|
| High CEO vega | Low CEO vega | High CEO vega | Low CEO vega | High CEO vega | Low CEO vega | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0119*** | −0.0042* | ||||
| (−3.13) | (−1.73) | |||||
| NCO_OPT | −0.0009*** | −0.0004* | ||||
| (−2.76) | (−1.95) | |||||
| RCO_OPT | −0.0113*** | −0.0036 | ||||
| (−2.97) | (−1.49) | |||||
| CONSTANT | 0.0051 | 0.0122 | −0.0077 | 0.0084 | −0.0027 | 0.0099 |
| (0.31) | (0.74) | (−0.46) | (0.51) | (−0.16) | (0.60) | |
| Chi-square difference | (0.05) | (0.07) | (0.00) | |||
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| R2 | 0.0909 | 0.0413 | 0.0892 | 0.0414 | 0.0904 | 0.0412 |
| N | 2,222 | 6,717 | 2,222 | 6,717 | 2,222 | 6,717 |
| Panel B: CEO vega | ||||||
|---|---|---|---|---|---|---|
| High CEO vega | Low CEO vega | High CEO vega | Low CEO vega | High CEO vega | Low CEO vega | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0119*** | −0.0042* | ||||
| (−3.13) | (−1.73) | |||||
| NCO_OPT | −0.0009*** | −0.0004* | ||||
| (−2.76) | (−1.95) | |||||
| RCO_OPT | −0.0113*** | −0.0036 | ||||
| (−2.97) | (−1.49) | |||||
| CONSTANT | 0.0051 | 0.0122 | −0.0077 | 0.0084 | −0.0027 | 0.0099 |
| (0.31) | (0.74) | (−0.46) | (0.51) | (−0.16) | (0.60) | |
| Chi-square difference | (0.05) | (0.07) | (0.00) | |||
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| 0.0909 | 0.0413 | 0.0892 | 0.0414 | 0.0904 | 0.0412 | |
| 2,222 | 6,717 | 2,222 | 6,717 | 2,222 | 6,717 | |
| Panel C: CEO tenure | ||||||
|---|---|---|---|---|---|---|
| Short CEO tenure | Long CEO tenure | Short CEO tenure | Long CEO tenure | Short CEO tenure | Long CEO tenure | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0035 | −0.0093*** | ||||
| (−1.42) | (−2.84) | |||||
| NCO_OPT | −0.0004 | −0.0007** | ||||
| (−1.58) | (−2.58) | |||||
| RCO_OPT | −0.0046* | −0.0087*** | ||||
| (−1.82) | (−2.72) | |||||
| CONSTANT | 0.0323* | −0.0832* | 0.0287 | −0.0893* | 0.0297 | −0.0888** |
| (1.79) | (−1.83) | (1.56) | (−1.91) | (1.60) | (−2.20) | |
| Chi-square difference | (0.00) | (0.00) | (0.06) | |||
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| R2 | 0.0434 | 0.0608 | 0.0434 | 0.0600 | 0.0435 | 0.0604 |
| N | 5,693 | 3,246 | 5,693 | 3,246 | 5,693 | 3,246 |
| Panel C: CEO tenure | ||||||
|---|---|---|---|---|---|---|
| Short CEO tenure | Long CEO tenure | Short CEO tenure | Long CEO tenure | Short CEO tenure | Long CEO tenure | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0035 | −0.0093*** | ||||
| (−1.42) | (−2.84) | |||||
| NCO_OPT | −0.0004 | −0.0007** | ||||
| (−1.58) | (−2.58) | |||||
| RCO_OPT | −0.0046* | −0.0087*** | ||||
| (−1.82) | (−2.72) | |||||
| CONSTANT | 0.0323* | −0.0832* | 0.0287 | −0.0893* | 0.0297 | −0.0888** |
| (1.79) | (−1.83) | (1.56) | (−1.91) | (1.60) | (−2.20) | |
| Chi-square difference | (0.00) | (0.00) | (0.06) | |||
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| 0.0434 | 0.0608 | 0.0434 | 0.0600 | 0.0435 | 0.0604 | |
| 5,693 | 3,246 | 5,693 | 3,246 | 5,693 | 3,246 | |
| Panel D: CEO gender | ||||||
|---|---|---|---|---|---|---|
| Female CEO | Male CEO | Female CEO | Male CEO | Female CEO | Male CEO | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0035 | −0.0054** | ||||
| (−0.58) | (−2.25) | |||||
| NCO_OPT | −0.0003 | −0.0004** | ||||
| (−0.63) | (−1.98) | |||||
| RCO_OPT | −0.0045 | −0.0056** | ||||
| (−0.65) | (−2.25) | |||||
| CONSTANT | 0.0154 | 0.0770 | 0.0115 | 0.0735 | 0.0128 | 0.0732 |
| (0.48) | (1.60) | (0.35) | (1.54) | (0.38) | (1.53) | |
| Chi-square difference | (0.00) | (0.00) | (0.00) | |||
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| R2 | 0.1373 | 0.0461 | 0.1373 | 0.0458 | 0.1374 | 0.0461 |
| N | 903 | 5,434 | 903 | 5,434 | 903 | 5,434 |
| Panel D: CEO gender | ||||||
|---|---|---|---|---|---|---|
| Female CEO | Male CEO | Female CEO | Male CEO | Female CEO | Male CEO | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| CAR | CAR | CAR | CAR | CAR | CAR | |
| PCO_OPT | −0.0035 | −0.0054** | ||||
| (−0.58) | (−2.25) | |||||
| NCO_OPT | −0.0003 | −0.0004** | ||||
| (−0.63) | (−1.98) | |||||
| RCO_OPT | −0.0045 | −0.0056** | ||||
| (−0.65) | (−2.25) | |||||
| CONSTANT | 0.0154 | 0.0770 | 0.0115 | 0.0735 | 0.0128 | 0.0732 |
| (0.48) | (1.60) | (0.35) | (1.54) | (0.38) | (1.53) | |
| Chi-square difference | (0.00) | (0.00) | (0.00) | |||
| Controls | Yes | Yes | Yes | Yes | Yes | Yes |
| Year fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| Industry fixed effects | Yes | Yes | Yes | Yes | Yes | Yes |
| 0.1373 | 0.0461 | 0.1373 | 0.0458 | 0.1374 | 0.0461 | |
| 903 | 5,434 | 903 | 5,434 | 903 | 5,434 | |
Note(s): This table presents the regression results of the effect of co-opted board on acquisition performance with other control variables for young versus old CEO in Panel A, low versus high CEO vega in Panel B, short versus long CEO tenure in Panel C and female versus male CEO in Panel D. Robust two-tailed t-statistics clustered by firm are presented in parentheses. The superscripts ***, ** and * correspond to statistical significance at the 1%, 5% and 10% levels, respectively. We present the variable definitions in the Appendix
Source(s): Authors’ own work
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