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The Biology of M&A

Josefsson, Olle LU and Nilsson, Filip LU (2020) BUSN79 20201
Department of Business Administration
Abstract
Purpose: The purpose of this paper is to investigate and explore how personality traits of CEO’s affect the strategic decision of acquiring another company and
whether the performance of the acquisition is affected by the examined traits.

Methodology: The study follows a quantitative approach with a hypothetical deductive method. The data is primarily retrieved from transcribed earnings calls
and statistical regression analysis is used for the event study where stated hypotheses are tested.
Theoretical perspectives: The theoretical perspective is based on theory and previous research related to M&A value creation, traditional corporate finance as well as
theories incorporating behavioral theory and theory from psychology.
Empirical... (More)
Purpose: The purpose of this paper is to investigate and explore how personality traits of CEO’s affect the strategic decision of acquiring another company and
whether the performance of the acquisition is affected by the examined traits.

Methodology: The study follows a quantitative approach with a hypothetical deductive method. The data is primarily retrieved from transcribed earnings calls
and statistical regression analysis is used for the event study where stated hypotheses are tested.
Theoretical perspectives: The theoretical perspective is based on theory and previous research related to M&A value creation, traditional corporate finance as well as
theories incorporating behavioral theory and theory from psychology.
Empirical foundation: The sample used in the study consists of 99 public acquisitions in the US market, announced between April 2010 and February 2020. Data
is obtained from Zephyr, Yahoo Finance, and Seeking Alpha.

Conclusions: The personality trait extraversion shows a significant negative relationship on M&A-intensity while neuroticism shows a significant positive relationship.
The event study provided a significant result that the acquiring firm had a negative
abnormal return of -1.2% on one month period and -2.0% on a two month period. As
for the personality traits influence on performance no significant results were yielded,
there were indications that neuroticism had a positive effect on performance, but as
mentioned, not significant (Less)
Please use this url to cite or link to this publication:
author
Josefsson, Olle LU and Nilsson, Filip LU
supervisor
organization
alternative title
CEO Personality Psychology in Corporate Takeovers
course
BUSN79 20201
year
type
H1 - Master's Degree (One Year)
subject
keywords
Chief executive officers, Five Factor Model, Mergers and acquisitions, Personality, Machine Learning
language
English
id
9015759
date added to LUP
2020-08-21 14:07:43
date last changed
2020-08-21 14:07:43
@misc{9015759,
  abstract     = {{Purpose: The purpose of this paper is to investigate and explore how personality traits of CEO’s affect the strategic decision of acquiring another company and
whether the performance of the acquisition is affected by the examined traits.

Methodology: The study follows a quantitative approach with a hypothetical deductive method. The data is primarily retrieved from transcribed earnings calls
and statistical regression analysis is used for the event study where stated hypotheses are tested.
Theoretical perspectives: The theoretical perspective is based on theory and previous research related to M&A value creation, traditional corporate finance as well as
theories incorporating behavioral theory and theory from psychology.
Empirical foundation: The sample used in the study consists of 99 public acquisitions in the US market, announced between April 2010 and February 2020. Data
is obtained from Zephyr, Yahoo Finance, and Seeking Alpha.

Conclusions: The personality trait extraversion shows a significant negative relationship on M&A-intensity while neuroticism shows a significant positive relationship.
The event study provided a significant result that the acquiring firm had a negative
abnormal return of -1.2% on one month period and -2.0% on a two month period. As
for the personality traits influence on performance no significant results were yielded,
there were indications that neuroticism had a positive effect on performance, but as
mentioned, not significant}},
  author       = {{Josefsson, Olle and Nilsson, Filip}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Biology of M&A}},
  year         = {{2020}},
}