Death of a Social Peer may Impact the Chief Executive Officer's Decisions

CEOs alter their strategic decision making after experiencing the death of a social peer, new research suggests.

The chief executive officer (CEO) of a company manages his day-to-day decision making and implements the company's long and short term plans. CEOs alter their strategic decision making after experiencing the death of a social peer, revealed a new research.

Investigators found that CEOs of large, public US firms pursued fewer acquisitions, especially large acquisitions, in the period after an independent director of their firm had died. The analysis included acquisitions following 296 cases of independent directors' deaths between 2002 and 2012.

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‘Chief executive officers (CEOs) alter their strategic decision making after experiencing the death of a social peer.’

"One possible explanation for this pattern is that CEOs who experience the death of a social peer become more aware of their own mortality. In turn, these CEOs might reevaluate their life priorities to place less emphasis on achieving external goals, such as acquisitions, that would otherwise bring them increased compensation and social status," said Dr. Wei Shi, lead author of the Strategic Management Journal article.

Source-Eurekalert

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