Time to complete the due diligence phase in mergers and acquisitions: impact of CEO psychological characteristics

Viswa Prasad Gada, Manish Popli*, Shavin Malhotra

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

Abstract

The CEO is the chief decision-maker with regard to corporate strategy, and extant literature highlights how CEOs’ psychological characteristics inform firms’ risky strategic choices. In this article, we focus instead on how CEOs’ psychological characteristics might lead to risk-mitigation actions. Building on the regulatory focus theory, we investigate the impact of CEO’s prevention focus on the due diligence process in merger and acquisition (M&A) deals. Using a sample of 339 majority-stake completed M&A deals by public firms from the United Kingdom, we find that CEOs having a stronger prevention focus increases the time these firms take to complete their M&A deals. We also find that this effect is mitigated when firms acquire target firms in related industries.
Original languageEnglish
Pages (from-to)5812-5825
Number of pages14
JournalApplied Economics
Volume53
Issue number50
Early online date7 Jun 2021
DOIs
Publication statusPublished - 27 Oct 2021
Externally publishedYes

Keywords

  • CEO
  • deal duration
  • due diligence phase
  • mergers and acquisitions
  • prevention focus
  • regulatory focus theory

ASJC Scopus subject areas

  • Economics and Econometrics

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