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CEO power, product market competition and the acquisition motive for going public
Author(s) -
Huang Jian,
Jain Bharat A.,
Shao Yingying
Publication year - 2019
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12316
Subject(s) - initial public offering , rivalry , competition (biology) , business , market power , product market , monetary economics , investment (military) , product (mathematics) , industrial organization , economics , market economy , microeconomics , incentive , biology , politics , political science , law , ecology , monopoly , geometry , mathematics
This study finds that CEO power and product market competition differentially influence post‐ IPO growth strategy and its economic consequences. Powerful CEO s are more likely to prefer acquisition growth over internal investment. Further, while CEO power is positively related to the likelihood, frequency and size of post‐ IPO acquisitions, it is unrelated to the post‐ IPO performance of acquisitive firms. In contrast, product market rivalry does not increase post‐ IPO acquisitiveness but is positively related to the performance of acquirers. Finally, CEO power enhances the performance of acquisitive IPO firms only when faced with intense competitive rivalry.