An acquiring firms chairman and chief executive and the importance of their tenure on M&A outcomes

There is a growing body of evidence that Mergers and Acquisitions (M&A) continue to be value destroying for many acquiring firm shareholders. This research looks at the importance of the length of time that the Chairman and the Chief Executive Officer of the acquiring firm have been together in their respective roles at the date of the acquisition (referred to as Joint Tenure), and its effect on shareholder value. This is important because if there is a correlation between Joint Tenure and acquiring firm performance this will provide an early indicator for investors of an M&A outcome and thereby improve their ability to manage risk. It is also significant for best corporate governance practice. This study examined acquisitions in Australia between 1990 and 2006, and found that the period of joint tenure is a significant contributor to acquiring firm shareholder value in M&A prior to, and following, an acquisition