Frankfurt School of Finance & Management gGMBH, Germany
Leveraging insights from social-psychological research on power, we develop a two-sided power-maintenance perspective to explain how founder-CEOs of both the acquirer and the target shape target CEO retention in acquisitions. Our perspective also underscores the significance of target firm performance, initial acquisition premium, and alternative bidders – three critical power levers in acquisition negotiations – as boundary conditions influencing the impact of acquirer and target founder-CEOs on target CEO retention. Through an analysis of 651 acquisitions involving publicly listed firms in the United States, our findings highlight a substantial influence of acquirer and target founder-CEOs on target CEO retention and suggest asymmetric effects of acquisition negotiation factors on the degree to which founder-CEOs impact target CEO retention.
