The Influence of CEO Acquisition Experience on Post-Acquisition Performance

Abstract: Existing literature on the relationship between acquisition experience and performance has produced mixed results and has primarily focused on the firms' own experience, neglecting the experience held by the firms' decision makers. Using the event study methodology, we study the effect of CEOs' prior acquisition experience on post-acquisition performance on a set of US public firms. Also, we study if CEO acquisition experience matters more when the acquiring firm is operating in an industry in which managers have more influence over strategic decisions. We find no significant positive effect of CEO acquisition experience on post-acquisition performance. This result also holds when we account for the degree of managerial discretion of the acquiring firm's primary industry. Our study indicates that there is no significant linear relationship between CEO acquisition experience and post-acquisition performance. Research on this link is limited and with regard to the many uncertainties involved in measuring acquisition experience we encourage more research to be done on this topic.