Download files
Abstract
This thesis analyzes the impact of CEO characteristics on corporate outcomes. The thesis explores several key characteristics, including their prior work experience. In so doing, the thesis significantly contributes to our understanding of the impact of CEO traits on corporate performance.
The first chapter focuses on the relationship between investment banking (IB) experience and takeover performance, emphasizing the role of knowledge spillovers. IB experience yields significant benefits for firms and for CEOs, conveying knowledge and expertise about what types of takeovers and when to do them. The results highlight that IB CEOs tend to engage more in acquisitions, use different, and potentially better methods of payment, and are better able to time takeovers. The results make a significant contribution to the literature, highlighting a factor that prior takeover studies have overlooked, and emphasizing the practical benefit of hiring CEOs with relevant prior work experience.
The second chapter explores whether such CEOs might be better able to structure divestitures. The chapter finds that IB CEOs are better able to decide when to divest, are more likely to divest the types of units associated with better strategic outcomes, and know how to use the proceeds efficiently. IB CEOs tend to strategically divest to refocus complex firms and to rectify their acquisition mistakes. They would divest unrelated, geographically distant and underperforming units. IB CEOs are also less likely to waste the divestiture proceeds by distributing them efficiently to shareholders through share repurchases rather than spending
on acquisitions. These results contribute to the divestiture literature, by emphasizing the importance of CEO personal attributes for divestiture performance.
The third chapter analyzes the impact of CEO characteristics on financial reporting decisions. Firms' financial reports have become increasingly opaque. Thus, the thesis analyzes which CEO attributes might be associated with disclosure practices. The chapter analyzes the role of several CEO attributes, including IB experience, overconfidence, and other career factors. The paper hypothesizes and shows that these CEO characteristics influence not only how readable are financial reports, but also the linguistic style of these reports. The results highlight the necessity of addressing these attributes when improving financial reports’ structure and when analyzing financial reports’ readability.