How Does Acquisition Experience Affect Managerial Career Outcomes?

Daniel Greene and Jared Smith

We use hand-collected data from acquisition press releases to investigate how acquisition experience affects the career outcomes of non-CEO senior managers. To address the non-random nature of gaining experience, we separately use manager and firm-year fixed effects, as well as an instrumental variable analysis. Acquisition experience is positively related to compensation, the likelihood of a future board seat, and the likelihood of promotion to CEO.  Further tests suggest that the effects of experience decay over time, have diminishing returns, and do not depend on deal quality.  Finally, we search SEC filings to document novel information on managerial roles in M&As.