This study introduces the similarity attraction theory into acquisition research, and examines how the relationship between the acquirer CEO and the target CEO can affect the target CEO’s retention following acquisition completion. We propose that extraversion similarity can generate mutual like and facilitate better communication between the acquirer CEO and the target CEO during their interactions and negotiations, which can enhance the target CEO’s likelihood of staying in the combined firm. We further suggest that the effect of extraversion similarity hinges on more observable surface-level demographic characteristics. Specifically, We propose the positive influence of extraversion similarity on target CEO retention will be stronger when the acquirer CEO and the target CEO lack similarity in ethnicity, education level, and alumni identity, which suggests that deep-level personality traits can serve as alternative bases to build common grounds in interpersonal interactions when the surface-level similarity is missing. Based on samples consisting of acquisitions undertaken between U.S. public firms, We find support for the above arguments.
CORE (COnnecting REpositories)
CORE (COnnecting REpositories)