Love thy neighbor: CEO extraversion and corporate acquisitions

•Extraverted CEOs favor local acquisitions.•Extraverted CEOs use their extended local networks.•The stock market favors local acquisitions made by extraverted CEOs.•The value created by such acquisitions is most likely facilitated by agency. We investigate the relationship between CEO extraversion a...

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Bibliographic Details
Published inFinance research letters Vol. 55; p. 103908
Main Authors Aabo, Tom, Hansen, Jakob Berggreen, Petersen, Sebastian Malling
Format Journal Article
LanguageEnglish
Published Elsevier Inc 01.07.2023
Subjects
Behavioral corporate finance
CEO extraversion
Geographical dispersion
Mergers & acquisitions
Mergers & acquisitions
G34
G40
Behavioral corporate finance
Geographical dispersion
CEO extraversion
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Summary:•Extraverted CEOs favor local acquisitions.•Extraverted CEOs use their extended local networks.•The stock market favors local acquisitions made by extraverted CEOs.•The value created by such acquisitions is most likely facilitated by agency. We investigate the relationship between CEO extraversion and the geographical dispersion of acquisitions within the U.S. The dispersion decision is important and has implications for employment, investments, and valuation. We show that extraverted CEOs prefer local deals and that the stock market favors local acquisitions made by extraverted CEOs. Our results support the notion that the extended and information-rich, local networks of extraverted CEOs as well as the agentic qualities of these CEOs facilitate the acquisition of local target firms. Our results are important in illuminating the channels through which extraverted CEOs make acquisitions and create value.
ISSN:1544-6123
1544-6131
DOI:10.1016/j.frl.2023.103908