The Institute of Management & Strategy (IoMS-HSG) has invited Prof. Taco Reus to a research seminar at the University of St. Gallen. Taco Reus is professor in Global Strategy at the Department of Strategic Management & Entrepreneurship, Rotterdam School of Management, Erasmus University (RSM). His research examines how firms are influenced by the environment in which they strategize, operate and expand, and how organizational capabilities and experience help or hurt firms in this environment.
A Relational Perspective on CEO Turnover: How Personality and Negotiation Conditions Affect Target CEOs to Stay or Leave Following Acquisitions
Scholars often emphasize situational and organizational factors to explain CEO turnover. Yet, whether a CEO stays or leaves inherently also is a very personal and interpersonal decision. This becomes more delicate during important life-changing events, such as when a CEO’s firm is acquired by another firm. We therefore study how the personalities of target and acquiring CEOs affect target CEO turnover following acquisitions. Analyses of comprehensive data on 407 pairs of CEOs bound together through M&As among public U.S. firms, reveal that extraverted target CEOs are more likely to leave their newly combined firms, while extraverted acquiring CEOs are more likely to entice target CEOs to stay with their newly combined firms. Supporting a reciprocal appeal among extraverts, we also find that more extraverted target CEOs are less likely to leave when their acquiring counterparts are more extravert as well. Moreover, we find that negotiation conditions shape the effect of personality – CEO involvement and lengthier negotiations not only make it more likely that extraverted acquiring CEOs entice target CEOs to stay, but also more likely that extraverted target CEOs stay following acquisitions.