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The Accentuated CEO career horizon problem: evidence from international acquisitions

We develop a conceptual model of the career horizon problem of CEOs approaching retirement and discuss its implications on firm risk taking, specifically in engagement in international acquisitions. Based on prospect theory and agency theory, we emphasize the legacy conservation and wealth preservation concerns of CEOs and investigate how their holdings of in-the-money unexercised options and firm equity accentuate or mitigate the career horizon problem. The model is tested in the context of international acquisitions with a sample of 293 U.S. firms over a five-year period (1995-1999). We find that a longer CEO career horizon is associated with a higher likelihood of international acquisitions. We also find that CEOs nearing retirement with high levels of in-the-money unexercised options and equity holdings are less likely to engage in international acquisitions than CEOs with low levels of in-the-money options and equity holdings. The study raises important considerations about the implications of CEOs' equity and in-the-money option holdings on firm risk taking at various stages of their career horizon..Printed journal

Ketersediaan

Call NumberLocationAvailable
PSB lt.dasar - Pascasarjana1
Penerbit John Wiley & Sons.,
Edisi -
Subjek Chief executive officers
Agency theory
Models
Careers
Acquisitions & Mergers
Retirement
studies
ISBN/ISSN 1432095
Klasifikasi -
Deskripsi Fisik -
Info Detail Spesifik -
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