Steward Effects of Target Founder-CEO in Takeovers |
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| Authors: | Qizhi Tao Fei Shen Yingying Shao |
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| Institution: | 1. School of Finance, Southwestern University of Finance and Economics, Chengdu, China;2. Department of Finance, Towson University, Towson, Maryland, USA |
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| Abstract: | Built upon the agency theory and the stewardship theory, this study examines the mergers and acquisitions (M&A) activities among Chinese publicly listed firms. Using a founder-CEO indicator, we separate steward effects from agency effects, and find that Chinese firms’ M&A activities are significantly influenced by the steward factors after controlling for the agency factors. Firms, of which CEO is a founder, enjoy relatively higher premium during M&A. Further investigation reveals that the steward effects vary in the power of CEO. The results show that steward effect is reinforced when founder-CEO is more powerful. |
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| Keywords: | CEO M& A stewardship theory |
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