Ripple Effects of CEO Awards: Investigating the Acquisition Activities of Superstar CEOs' Competitors

This study proposes that CEOs may undertake intensive acquisition activities to increase their social recognition and status after witnessing their competitors' winning CEO awards. Using a sample of U.S. S&P 1,500 firm CEOs, we.find that CEOs engage in more intensive acquisition activities in the period after their competitors won CEO awards (i.e., postaward period), compared to the preaward period. Moreover, this effect is stronger when focal CEOs themselves had a high likelihood of winning CEO awards. Ourfindings also show that acquisitions by focal CEO firms in the postaward period realize lower announcement returns compared to acquisitions by the same CEOs in the preaward period. Managerial summary: Each year a few CL'Os receive CEO awards from business media and CEOs who receive such awards become instant celebrities, that is, superstar CEOs. This study explores how superstar CEOs' competitors react to not winning CEO awards. We find that superstar CEOs' competitors undertake more intensive acquisition activities in the postaward period compared to the preaward period. This is particularly true for competitors who were close, yet did not win CEO awards. In addition, acquisitions by superstar CEOs' competitors are associated with lower announcement returns in the postaward compared to the preaward period. These.findings collectively indicate that acquisitions may be used as a channel for superstar CEOs' competitors to elevate their own social status, but at a cost to shareholders. Copyright (C) 2017 John Wiley & Sons, Ltd.