Tracking deal flow using relationship capital management information supplied by the data firm BoardEx, CEOs with closer ties to other executives, board members, bankers and other market insiders were both more deal-prone and less likely to produce profitable combinations than less well connected chiefs, the study from Sam. M. Walton College of Business found.
Referencing a network of nearly 400,000 U.S. corporate officers and directors involving 776 deals, the researchers concluded that the transactions generally enriched the CEOs who launched them, while “destroying value” at the companies involved.
“As you might expect, an individual’s position in the social network matters,” said lead researcher Tomas Jandik, an associate professor of finance. “But this positioning doesn’t necessarily lead to financial gains for the firms they lead.”
He added, “We show that CEOs with higher network centrality—those who are highly connected socially—are more likely to pursue acquisitions, and that those deals are more likely to destroy value.”
The study found that highly-connected CEOs used their power and influence to launch deals more frequently. However, these mergers and acquisitions “generated mostly negative stock returns for the bidder firm’s shareholders and often lowered the combined value of the merged firms,” the study reported.
Well-connected CEOs are often able to control the flow of information well enough to fend off corporate governance mechanisms in place to prevent value deterioration, Prof. Jandik said.
The study is available on the Social Science Research Network and is forthcoming in the Journal of Financial Economics.
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1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
