Acquisitions and CEO power: Evidence from French Networks

During mergers and acquisitions, the CEOs of the acquiring firms are likely to cancel the deal if the market does not react favorably to its announcement. Using a sample of French acquisition announcements during the period from 2000 to 2005, this paper studies the conditions in which CEOs are more willing to listen to investors. Furthermore, according to the strong networks developed through French elite schools' alumni and board ties, the well-connected CEOs are more likely to complete any deal in spite of a negative market reaction to acquisition announcements.