Ripple Effects of CEO Awards: Investigating the Acquisition Activities of Superstar CEOs' Competitors

Wei Shi, Yan Zhang, Robert E. Hoskisson

Research output: Contribution to journalArticle

21 Scopus citations

Abstract

Research summary: This study proposes that CEOs may undertake intensive acquisition activities to increase their social recognition and status after witnessing their competitors' winning CEO awards. Using a sample of U.S. S&P 1,500 firm CEOs, we find that CEOs engage in more intensive acquisition activities in the period after their competitors won CEO awards (i.e., postaward period), compared to the preaward period. Moreover, this effect is stronger when focal CEOs themselves had a high likelihood of winning CEO awards. Our findings also show that acquisitions by focal CEO firms in the postaward period realize lower announcement returns compared to acquisitions by the same CEOs in the preaward period. Managerial summary: Each year a few CEOs receive CEO awards from business media and CEOs who receive such awards become instant celebrities, that is, superstar CEOs. This study explores how superstar CEOs' competitors react to not winning CEO awards. We find that superstar CEOs' competitors undertake more intensive acquisition activities in the postaward period compared to the preaward period. This is particularly true for competitors who were close, yet did not win CEO awards. In addition, acquisitions by superstar CEOs' competitors are associated with lower announcement returns in the postaward compared to the preaward period. These findings collectively indicate that acquisitions may be used as a channel for superstar CEOs' competitors to elevate their own social status, but at a cost to shareholders.

Original languageEnglish (US)
Pages (from-to)2080-2102
Number of pages23
JournalStrategic Management Journal
Volume38
Issue number10
DOIs
StatePublished - Oct 1 2017
Externally publishedYes

Keywords

  • CEOs
  • competitors
  • mergers and acquisitions
  • organization awards
  • social comparison

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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