Do qualified key management create shareholder value? Evidence from Nordic M&As

Abstract: In this paper we investigate the relation between managerial characteristics and shareholder value in the context of a merger or acquisition announcement. We use a Nordic dataset on completed mergers and acquisitions, paired with unique data on analyst rankings to proxy for managerial traits, between 2004 and 2018. Our findings indicate on a positive relation between managerial characteristics and shareholder value, measured in abnormal returns. However, our findings are not statistically significant, thus we cannot conclude that the relationship holds, nor that it does not hold. One interpretation of our study is therefore that that the market participants do not believe that managers with high managerial capability necessarily make shareholder value maximizing decisions. On the other hand, we also discover indications of that Key Management Capability and CFO Capability are economically significant. Our findings highlight the need for further research on the relation between managerial characteristics and shareholder value, especially post announcement.