Family Involvement, Inside Debt, and Geographic Distance of Acquisitions: Evidence from the U.S.
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Date
2017
Authors
Sihan, Qi
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Abstract
This study investigates the joint effects of family involvement and CEO’s inside debt on firm’s decisions on acquisitions, especially on the geographical distance between the acquirer and target. The empirical findings indicate that family firm tends not to choose long-distance acquisitions for the sake of preservation of its socio-emotional wealth, and that family firm is less likely to set debt-like compensation in CEO’s incentive compensation package. More interestingly, while firms offering more inside debt to their CEOs tend to acquire targets far from their headquarters in general, this effect is weakened by family involvement.
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Keywords
family involvement, inside debt, acquisitions, geographical distance