Abstract
This thesis examines whether Chief Executive Officers (CEOs) with shorter initial contract length suffer greater time pressure and consequently engage in more visible efforts via mergers & acquisitions (M&A), which is one of the most significant visible corporate investments, to obtain the contract renewal benefit at the expiration of initial contract, even if the M&A performance is relatively weaker due to limited available choices in such a short period.A unique dataset consisting of 1,227 CEO contracts with appointment dates between January 1st 1999 and December 31st 2007 in the U.S. and 20,539 M&A transactions in the same period was collected, and I document the following three results. (1) New CEOs are likely to engage in more frequent visible efforts via M&As, more frequently than existing CEOs, although the performance is relatively weaker. (2) Exploiting an exogenous shock to the CEO contract length, I show that CEOs with shorter initial contract lengths engage in more visible efforts more frequently during this period but with a relatively weaker performance. (3) The likelihood of contract renewal is higher among CEOs that engage in more frequent visible efforts despite the relatively weaker M&A performance.Taken together, the results suggest that CEO contract length should be extended and the company should penalise bad efforts to mitigate the effects of time pressure and contribute to higher-quality visible efforts among CEOs
Published Version
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