Abstract
This empirical study investigates the impact of the CEO’s regulatory focus on the firm’s propensity to use earnouts in the consideration structure of mergers and acquisitions. While prior studies have acknowledged and examined the role of CEO cognition on various corporate strategic actions, the impact of CEO’s regulatory focus on their risk perception and hence the usage of risk mitigating instruments in M&A deals remains under-explored. Using a dataset of 369 deals in the context of United Kingdom, this study finds a positive relationship between CEO’s prevention focus intensity and usage of earnouts. Furthermore, as per the phenomenon of regulatory fit and misfit, we examine the moderating impact of situational characteristics of the acquirer's prior acquisition experience and the nature of the economic activity of the target firm on the relationship between CEO's prevention focus intensity and the propensity to use earnouts. Building on the micro-foundations of strategy, these findings contribute to the literature of corporate strategy and strategic leadership, in particular, the role of CEO in the deal structuring of mergers and acquisitions.
Original language | English |
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Number of pages | 1 |
DOIs | |
Publication status | Published - Aug 2018 |
Externally published | Yes |
Event | 78th Annual Meeting of the Academy of Management: Improving Lives -- Improving Health and Well-being in Society: How Can Organizations Help? - Chicago, United States Duration: 10 Aug 2018 → 14 Aug 2018 https://aom.org/events/annual-meeting/past-annual-meetings/2018-improving-lives |
Conference
Conference | 78th Annual Meeting of the Academy of Management |
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Abbreviated title | AOM 2018 |
Country/Territory | United States |
City | Chicago |
Period | 10/08/18 → 14/08/18 |
Internet address |