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How Does Acquisition Experience Affect Managerial Career Outcomes?

Published online by Cambridge University Press:  05 November 2020

Daniel Greene  and
Jared Smith Open the ORCID record for Jared Smith [Opens in a new window]
Daniel Greene
Affiliation:
Clemson University College of [email protected]
Jared Smith*
Affiliation:
North Carolina State University Poole College of [email protected]
*
[email protected] (corresponding author)
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Abstract

We use hand-collected data from acquisition press releases to investigate how acquisition experience affects the career outcomes of non-CEO senior managers. To address the non-random nature of gaining experience, we separately use manager and firm-year fixed effects, as well as an instrumental variable analysis. Acquisition experience is positively related to compensation, the likelihood of a future board seat, and the likelihood of promotion to chief executive officer. Further tests suggest that the effects of experience decay over time, have diminishing returns, and do not depend on deal quality. Finally, we search Securities and Exchange Commission filings to document novel information on managerial roles in mergers and acquisitions.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 56 , Issue 4 , June 2021 , pp. 1381 - 1407
Copyright
© THE AUTHOR(S), 2020. PUBLISHED BY CAMBRIDGE UNIVERSITY PRESS ON BEHALF OF THE MICHAEL G. FOSTER SCHOOL OF BUSINESS, UNIVERSITY OF WASHINGTON

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Footnotes

We thank Robert Schonlau (the referee) for improving the paper. We also thank Stu Gillan, Shane Johnson, XinXin Li, Brandon Lockhart, Shawn Mobbs, Chip Ryan, Matthew Serfling, Denis Sosyura, an anonymous reviewer, seminar participants at Clemson University, and conference participants at the 2018 Midwest Finance Association Annual Meeting in San Antonio for helpful comments. We are grateful for financial support from a Dean’s Excellence Fund Grant. We thank Morgan Clark, Efe Crentsil, and Pam Harris for excellent research assistance.

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