Other Unpublished Work
Top Executive Background and Corporate M&A: The Case of Former Investment Bankers
We study the M&A activity of firms with top executives whose employment history includes experience in a Wall Street firm, especially those with investment banking background ("IB executives"). In terms of strategy, controlling for firm-level effects, we document that firms with IB executives (and directors) engage in more divestitures. We also find that the presence of an IB CFO—but not CEO—is associated with more acquisitions. Next, in terms of accounting choice, we find that IB executives are more likely to impair goodwill only when their reputation concerns are likely to be low. Finally, in terms of performance, we find that market reactions to transaction announcements vary with the presence of a former Wall Street executive primarily when (s)he is an alumnus of one of the advisors on the deal. Overall, our results suggest that the influence of Wall Street executives on their firm's M&A stems not only from their functional background but also from their reputation concerns and social networks.
Keywords: Managerial Roles;
Mergers and Acquisitions;
Social and Collaborative Networks;
Power and Influence;