1
Master Thesis for MSc Finance
“Time to go. Are firms with a retiring CEO more likely to be acquired? Evidence from the UK”
,
Supervisors: Prof. Dr. C.L.M. Hermes, Dr. H. Gonenc.
2 Acknowledgments
I wish to thank Dr. Niels Hermes and Dr. Halit Gonenc for their support, encouragement and direction during the course of this thesis.
3 Abstract
This paper aims to show the relationship between target CEOs retirement age preference and chances of target firm being taken over. Using CEO panel data on UK firms for a period between 1999 and 2013 I find a positive relationship that the companies of CEOs who are close to, or at retirement age, are more likely to sell their firm under their tenure. This impact is further reinforced in firms with good corporate governance practices.
1. Introduction
The role of one of the most important actors in the field of corporate governance, i.e. the Chief Executive Officer (CEO), is crucial for the success of any firm. According to Jensen and Meckling’s (1976) agency theory a CEO may have incentives that diverge those of the shareholders. CEO or top management incentives or actions may damage the firm under their control in various ways: insufficient exertion of effort, unnecessary extravagant investments, and entrenchment strategies which ensure the security of their position (Tirole, 2006). Shareholders’ and a target CEO’s interest may diverge during a takeover period of the target firm. In this situation, the target CEO will have less willingness to sell the firm under his or her control due to high private costs from losing the tenure. However, this private cost could be lower if the CEO is already close to the retirement or at the retirement age. The private costs can be even positive, turning into benefits if the target CEO is compensated for a successful takeover via various payments as golden parachute or other monetary package provided during takeover. Therefore, firms with a retiring CEO could be more likely to make a successful deal due to their CEO’s lower private costs. Also, the availability of good corporate governance practices like an outsider dominated board and the separate CEO and Chair positions could also help to increase the chances of successful deal (Fama and Jensen, 1983; Sloan and Dechow, 1991; Jenter and Lewellen, 2015).
4 higher number of independent directors in the board with a CEO at retirement age, increase the chances of a successful deal. The reason for this is because lower private costs for the CEO and good corporate governance practices in the firm result in shareholder maximizing actions, i.e. a firm being sold.
The rest of this paper is structured as follows. Section 2 will include a review of the literature as well as the development of my hypothesis. Section 3 describes the data this paper used to achieve the results and section 4 present the methodology. Section 5 will summarize my results and Section 6 will provide my conclusion.
2. Literature review and hypotheses
Agency problems arise during the period of takeover, since interests of shareholders and the CEO are not aligned. During takeover a diversified shareholder may have the opportunity to have a capital gain, while the target company’s CEO, in case of successful completion of the acquisition, will most likely lose his/her job (Buchholtz and Ribbens, 1994). As a result, the CEO of the target firm may have a disincentive to sell the company should the target firm receive an offer. Disincentive to sell may be due to the private costs of a target CEO. Private cost of losing the top managerial position of CEO described in Buchholtz and Ribbens (1994) is further alleviated since most often CEOs of targets do not find further employment and have to retire early. Hartzell et al. (2004) observe that large number of CEOs after takeover do not find further employment or have poor career prospects in general. This could be the result of firm-specific skills that were obtained by target CEO, but may not be valuable to the other firm if he or she decides to continue his or her career (Coffee et al., 1988) Having firm-specific skills instead of position specific or industry specific could deter a CEO from the positions he or she is desiring. Furthermore, other private costs associated with losing nonmonetary benefits could also deter target CEO to sell firm in premium, creating an agency problem. For instance, above mentioned benefits could be power, prestige, and public visibility (Jensen and Murphy, 1990) associated with the tenure that will be imminently lost after the acquisition. Hartzell et al. (2004) find that conditional probability of target CEOs who find an executive role after successful takeover is quite low, supporting the idea that power, prestige and public visibility is lost for the majority of CEOs after takeover.
5 result in a situation where a board will be inefficient in monitoring the executives of a firm, which could result in actions of managers that do not maximize shareholder value.
Understanding the logic behind a CEO’s strategic decisions and drive for his or her actions are important for the financial performance of his or her firm. The upper echelons theory indicates that CEO’s individual characteristics and preferences may be important for strategic decision making (Hambrick and Mason, 1984). Hambrick and Mason (1984) argue that factors such as age, previous functional track(s), education, socioeconomic roots and the financial position of executives may influence a variety of strategic decisions, including, but not limited to, innovation, acquisitions, financial leverage and integration. All these factors have an impact on firm performance. As the focus of the paper is not on general impact of above mentioned factors to the performance, only acquisitions related factors will be further discussed The impact of a CEO’s age on decisions in market for corporate control can be explained by several factors too. Yim (2013) finds that firms led by a younger CEO are more likely to announce an acquisition due to the fact that a successful takeover increases permanent compensation of the acquirer’s CEO. A younger CEO therefore will have higher incentive to undertake an acquisition as early as possible to enjoy a higher compensation throughout his or her tenure. This incentive to perform takeovers will decline as the CEO will grow older. Bertrand and Mullainathan (2003) argue, that CEOs in general have a preference for the quiet life, while Yim (2013) additionally points out that this preference grows as the CEO gets older, indicating older CEOs have less incentive to make acquisitions.
6 Research and Development (R&D). They associate this focus on short-termism of retiring CEOs to report higher earnings figures in their last years. However, this issue is moderated and eliminated through good governance practices in the firm.
At the same time, individual characteristics and particularly the impact of age of a CEO whose firm is being targeted is not widely covered in the literature. Buchholtz and Ribbens (1994) find that target CEOs are most likely to resist for a takeover at the age of 55 and the relationship between resistance and age is reverse u-shaped. It could be the result of lower retirement costs of very young CEOs, who are able to find a job elsewhere in the market, while CEOs in their 50s are too young to retire but too old to find a new job, therefore most likely to resist, especially if the CEO had to acquire firm specific skills that will be less useful elsewhere (Coffee et al., 1988). Thus, CEOs who are older and close to retirement age will be less likely to resist since losing the CEO position is imminent due to retirement. This situation is further exacerbated if the amount of compensation paid to the target CEO after successful takeover (golden parachutes) is higher than the amount of compensation the target CEO would have received if he or she didn’t sell the firm. Moreover, Jenter and Lewellen (2015) find that firms with a CEO at retirement age were less likely to adopt takeover defense strategies (poison pills, classified boards and supermajority rules). The decision not to adapt defense strategies could be due to the lower private costs of the CEO who is at retirement age.
Overall the decision to retire at a certain age interval could be attributed to several factors like the end of the employment contract, realization of customary practice, availability of pensions or other cash flows after retirement age and other perceived factors like a change in preferences towards leisure (Lumsdaine et al. 1990; Jenter and Lewellen, 2015). This indicates that all of the above mentioned could change the preference of a CEO, consequently reducing private merger costs of a CEO in a takeover setting. Under this situation, I would argue that impact of the agency problem is even reduced and CEOs interests coincides with those of the shareholders. In this situation, a CEO who may have been opposing a takeover attempt due to private merger costs in his or her younger age will be willing to sell the firm if he or she is close to retiring. Additionally, he or she could think that that there are younger, more capable CEOs than him (Jenter and Lewellen, 2015). Furthermore, the Board of Directors could also be forcing the CEO to retire and not offer prolongation of his/her tenure. This tension and distrust could potentially create disutility from the job to the CEO. (Jenter and Lewellen, 2015)
7 market, end of career and other perks) will be not as high as it would be in younger ages making a CEO not to resist an offer for the firm he/she works for more likely. Expecting the above mentioned situation, an acquirer firm may indeed make an offer for a firm whose CEO is at retirement age, expecting less resistance from the targets CEO (Jenter and Lewellen, 2015). Jenter and Lewellen (2015) indeed find that CEOs at a retirement age (64-66) are more likely to receive a bid on firms they are supervising compared to other CEOs in different age groups. It could be argued that a target CEO’s interest will be most aligned with those of shareholders if the CEO is at retirement age.
Therefore, firms with a CEO at retirement age should have higher chances of being acquired and taken over compared to CEOs at other age, which result in following hypothesis:
Hypothesis 1: Target firms with a CEO at retirement age have a higher probability of being acquired than
firms with CEOs not in retirement age.
Several papers (Lambert and Larcker, 1985; Buchholtz and Ribbens, 1994) agree that a number of corporate governance measures should be adopted in the firm to prevent divergence of shareholders and CEOs interests. Possible measures include, but are not limited to, golden parachutes (payments for the departing CEO in order to compensate a lost job), equity based compensation and performance bonuses. However, above measures may not be enough to compensate for a possible loss of associated monetary and non-monetary benefits of a CEOs position, which could include, but is again not limited to, salary, bonuses, stock options as well as firm jets, security and other allowances (Tirole, 2006).
8 firm internal executives with strong expertise to the board. Shivdasani (1993) finds that ownership by block holders not associated with the management increase, while ownership by block holders associated with management decrease the chance of a hostile takeover. This could lead to the assumption that hostile takeover markets and the board of directors are substitute control mechanisms, while hostile takeovers and unaffiliated block holdings are in contrast complementary mechanism for corporate control. The substitution impact of the board of directors and the takeover market supports Fama and Jensen’s (1983) hypothesis regarding the role of takeover markets. North (2001) finds that firms with lower managerial ownership and higher ownership by outsiders were more likely to be acquired, suggesting that firms with higher ownership by managers indicated higher desire for maintaining control and that outside parties facilitate the takeover process. Cotter et al. (1997) find that boards dominated by Independent NEDs are more likely to attract higher premium gains during takeover for shareholders and are more likely to use resistance strategies in order to maximize shareholder value by asking a higher bid. Cotter et al. (1997) explain their findings support the hypothesis of Fama and Jensen (1983) that outside directors as monitors are more likely to make decision consistent with shareholder wealth-maximization.
The effectiveness of the board is not only dependent on its composition, but also heavily influenced by internal administrative structures (John and Senbet, 1998). Klein (1998) found an empirical evidence that firms with independent monitoring committees (Audit and Executive Compensation) were positively associated with having a lower amount of outstanding debts and higher free cash flow as well as better corporate financial accounting (Klein, 2002). This indicates that independent committees are the best monitors of the financial accounting process and financial performance of the firm.
Furthermore, functional experience and expertise of Board members could be important for the performance of the firm. For instance, boards with technical experience in finance can implement better financial policies. Gore et al. (2011) find that firms with financial experts as part of the board have a stronger oversight over their firm’s financial policies and strategies. Moreover, Guner et al. (2008) find that firms with a board that consists of independent NEDs with previous financial executive position were more likely to announce positive returns after acquisitions.
9 Thus, the impact of a CEO whose interests might not be aligned with the shareholders’ interests should be reduced by better corporate governance and in turn it should reinforce the impact of CEO whose interest corresponds to those of the shareholders. However, Jenter and Lewellen (2015) find that firms with good corporate governance practices and retirement age CEO were less likely to get an offer for the firm. Due to the established literature I expect that good corporate governance practices (CEO Chair separation, greater number of outside Directors and technical Board with financial expertise) in a firm should increase the chances of completing a deal with firms whose CEO is at retirement age.
Hypothesis 2: The impact of CEO retirement age preferences is higher on probability of successful deal,
for firms with good corporate governance practices
3. Data and methodology
Data on CEO level is collected from Boardex Europe and its data on UK Companies. Following Jenter and Lewellen (2015) companies in the financial industry, real estate and utilities were excluded from the list. Moreover, sectors were classified into categories according to the Industry Classification Benchmarks resulting in a final sector list of: consumer goods, industrials, oil and gas, basic materials, consumer services, health, technology and telecommunications. As Boardex Europe lists all members of the board of directors, only observations in which position was identified using words as “CEO”, “Executive CEO”, “Executive Chairman” were chosen. Moreover, CEO year observations without respective firm International Securities Identification Number (ISIN) were excluded. In overall the CEO panel consists of 8420 CEO-Year observations, while the number of unique firms is 1245.
10 Datastream of Thomson Reuters database is used for collecting data on control variables like ratio of market value of equity to book value of equity, market value of equity and return on assets as well as return on equity of target firms.
After merging the CEO panel with the acquisitions information from the Zephyr Database, firms with completed deals are labeled as successful, while the rest are considered as unsuccesful. In total, successful observations was 164 and unsuccessful observations 8256. Therefore, the dependent variable deal was equal to 1 in case of a successful deal for the firm and 0 in case of unsuccessful. Considering dependent variable binary characteristic, logistic regression is used since OLS can give negative fitted results instead of a range between 0 and 1.
The key independent variable in this paper is the retirement age dummy variable (age6066). The retirement age dummy is equal to 1 if a CEO’s age is between 60 and 66 and 0 otherwise. I choose this age range since the percentage of workers, constituting the majority of the workforce, retiring during these years is the highest. (Banks and Smith, 2006). Moreover, Banks and Smith (2006) find that in the UK sample, people with higher qualifications tend to retire earlier, starting from an age of around 60. Therefore, instead of only focusing on the age of 64 to 66 as in Jenter and Lewellen (2015), I extended the focus age from 60 to 66.
The Basic Model (1) has these specification.
𝑝𝑟𝑜𝑏 (𝐷𝑒𝑎𝑙 = 1)𝑖= 𝑓0(𝐶𝐸𝑂 𝑎𝑔𝑒, 𝑟𝑒𝑡𝑖𝑟𝑒𝑚𝑒𝑛𝑡 𝑎𝑔𝑒 𝑑𝑢𝑚𝑚𝑦 (60 𝑡𝑜 66), 𝐶𝐸𝑂 𝐶ℎ𝑎𝑖𝑟 −
𝑠𝑒𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛 𝐷𝑢𝑚𝑚𝑦, 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑒𝑥𝑝𝑒𝑟𝑡𝑖𝑠𝑒 𝑜𝑓 𝑏𝑜𝑎𝑟𝑑 )
This model was further extended to include factors such as: financial crisis years, market value of equity, return on assets, return on equity and market to book value of equity. The most complete model (8) for the full sample is given below.
𝑝𝑟𝑜𝑏 (𝐷𝑒𝑎𝑙 = 1)𝑖= 𝑓0(𝐶𝐸𝑂 𝑎𝑔𝑒, 𝑟𝑒𝑡𝑖𝑟𝑒𝑚𝑒𝑛𝑡 𝑎𝑔𝑒 𝑑𝑢𝑚𝑚𝑦 (60 𝑡𝑜 66), 𝐶𝐸𝑂 𝐶ℎ𝑎𝑖𝑟 −
𝑠𝑒𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛 𝐷𝑢𝑚𝑚𝑦, 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑒𝑥𝑝𝑒𝑟𝑡𝑖𝑠𝑒 𝑜𝑓 𝑏𝑜𝑎𝑟𝑑, 𝑝𝑢𝑏𝑙𝑖𝑐𝑙𝑦 𝑡𝑟𝑎𝑑𝑒 𝑓𝑖𝑟𝑚 𝑑𝑢𝑚𝑚𝑦,
log 𝑛𝑒𝑡𝑤𝑜𝑟𝑘 𝑠𝑖𝑧𝑒, 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑐𝑟𝑖𝑠𝑖𝑠 𝑦𝑒𝑎𝑟𝑠 𝑑𝑢𝑚𝑚𝑦, 𝑖𝑛𝑑𝑒𝑝𝑒𝑑𝑒𝑛𝑐𝑒 𝑜𝑓 𝑏𝑜𝑎𝑟𝑑 𝑟𝑎𝑡𝑖𝑜, 𝐶𝐸𝑂 𝑎𝑔𝑒 𝑠𝑞𝑢𝑎𝑟𝑒𝑑, 𝑚𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑒𝑞𝑢𝑡𝑦, 𝑚𝑎𝑟𝑘𝑒𝑡 𝑡𝑜 𝑏𝑜𝑜𝑘 𝑟𝑎𝑡𝑖𝑜, 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑒𝑞𝑢𝑖𝑡𝑦, 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑎𝑠𝑠𝑒𝑡𝑠 )
12 imitate a change (Jensen and Ruback, 1983; Buchholtz and Ribbens, 1994). Market value to book value of equity (wmb) is also included since firms with higher M/B ratio may be more targeted since they may be a source of growth for an acquirer. This phenomenon is quite popular in the healthcare and technology industry. Return on assets (wroa), return on equity (wroe) and market to book value of equity (wmb) are winsorized at 95% in order to avoid impact of outliers (Jenter and Lewellen, 2015).
Also, industry dummies were incorporated in order to capture possible differences in acquisitions in different industries. Connectedness of a CEO with other firms and directorships in other boards may also have an impact on the probability of completing a deal. Chikh and Filbien (2011) find that acquirer CEOs in French firms who had better network due to attendance in elite French (business) schools are more likely to complete acquisition deals. During any acquisition period information flow between the two parts is the key (Chikh and Filbien, 2011). Haunschild and Beckman (1998) subdivided information during acquisition periods into two categories, one being private and the other being public. Public acquisition information is available to the general public from annual reports and other compulsory information released by firm, while private information may be available from networks and friendship. Therefore, using the same logic for target side, target firms whose CEO has a bigger number of connections in the corporate world may attract more offers due to possible flow of private information to potential acquirers. Networking effect is also included as a control variable to model and measure a natural log of total number of connections a CEO has (lognetworksize)
13 Table 1. Descriptive statistics
14 Table 2. Correlation Matrix
The table present correlation coefficients between various variables for a full sample. Ageyrs – age of CEO, age6066 dummy variable receiving 1 if CEO is between 60 and 66, pastcfo is ratio of directors with previous CFO/FD background in the board, ratioaudit is ratio of independent NEDs in the board; indepdirec is the ratio of independent directors on the board; ceosep is a dummy variable receiving 1 if CEO and Chair role separated, 0 otherwise; crisis0809 is a dummy variable receiving 1 if year is 2008 or 2009, 0 otherwise; lognetworksize is natural log number of connections CEO has; lnmveq is a natural log of market value of equity; wroe is one year lagged return on equty of a target firm winsorized at 5% and 95%; wroa is return on assets of a firm winsorized at 5% and 95%; wmb is ratio of market value to book value of equity winsorized at 5% and 95%.
15
4. Results
16 One of the issues in interpretation of these results is possible endogeneity. In this paper, omitted variables could be one of the sources of endogeneity. For instance, it is assumed that corporate performance, corporate governance and CEO characteristics influence probability of successful deal, while other relevant known and unknown variables could be great importance for the successful deal. For example, not all relevant corporate governance are covered in this paper.
17 firms with better efficiency should worry less about takeover market. Overall, results indicate that even after controlling for firm performance, positive association between being acquired and the target CEO being close to retirement age holds true. However, these results should be carefully viewed since the number of observations with completed deals is relatively low (76) after inclusion of the financial performance variables.
Furthermore, after finding some support for the hypothesis that CEOs at retirement age are more likely to sell their firm, I examine the joint impact of corporate governance measures and a retirement age dummy. The interaction effect of a CEO’s retirement age and corporate governance practices are given in table 5 and table 6. Table 6 models differ by inclusion of a different moderation variable between CEO age retirement dummy and corporate governance indicators. In the full sample, an inclusion of interaction terms reinforce the positive association between retirement age and takeover probability. Positive interaction term sign for the retirement age dummy (age6066) and ratio of independent directors on the board (indepdirec) could point that firms with retirement age CEO and good corporate governance practices are more likely to be acquired. Moreover, the positive sign for interaction term remain significant when corporate governance indicator is proxied from separation of CEO and Chair role that gives additional support that firms with retiring CEO and good corporate governance mechanism are more likely to be acquired. Predictive margins indicate that firms with CEO Chair separation and CEOs in retirement age were 52.8% more likely to receive an offer comparing to a firm with a CEO in retirement age but without CEO Chair separation. The similar results are found for the sample of public firms, though the magnitude is smaller comparing to the full sample. Interaction terms for both CEO retirement age dummy (age6066) and independent directors ratio in the Board (indepdirec) as well as CEO retirement age dummy (age6066) and CEO Chair Separation (ceosep) are positive indicating firms with CEO at retirement age and good corporate governance practices are more likely to be acquired. Predictive margins indicate that firms with separate CEO and Chair roles are 25% more likely to be acquired compared to firms with an executive Chairman. It could be inferred from above that better corporate governance mechanisms in the firm do indeed result in actions maximizing shareholders wealth, i.e. a firm being successfully sold.
18
5. Conclusion and Further Research
This paper aims to the impact of private costs for a target CEO during acquisition and its relationship with a CEO’s retirement age. I argue that due to lower private cost of a CEO at retirement age, he or she will be more willing to sell the firm in case of a takeover. Analysis shows some support for this argument, indicating CEOs at retirement age tend to have higher probability of selling their firm compared to other age groups. The results are stronger and more definitive if the target firm is publicly traded when compared to the full sample. Secondly, I test the moderating impact of good corporate governance practices on firms. I argue that impact of a CEO at retirement age on completion of successful deal should be reinforced if a target firms initially adopted good corporate governance practices. The results are somehow mixed for this hypothesis. For instance, a higher ratio of independent directors increases the probability of selling the firm whose CEO is at retirement age. Similar results hold when the corporate governance indicator is proxied from CEO and Chair separation. Above mentioned results may indicate that firms with a CEO at retirement age are indeed more likely to sell the firm and this effect is further reinforced if good corporate governance mechanisms are present in the firm.
There are several limitations of this paper. First of all, the number of observations for acquisitions is relatively low and the number of observations with CEO’s receiving offer on firm is also low. Potentially this could be an issue as a small sample size could create a bias in the results. Also, an endogeneity problem may exist in this paper. For instance, there may be several factors that jointly impact several independent or dependent variables, but are not included in the model. Furthermore, analysis of premiums should also be covered in future research in order to measure the impact of premiums paid for the firm and general wealth creation during acquisition. For instance, Jenter and Lewellen (2015) find no evidence that firms with a retiring CEO have received less premium than firms with CEOs in another age group, however in Jenter and Lewellen (2011) they find that CEOs at retirement age have received lower premium compared to other age groups. This may have substantial impact for the problem of agency and the difference between interest of shareholder and the CEO. For instance, if a CEO at retirement age is less likely to try to achieve a better premium, it is not guaranteed that firm shareholders would be better of without selling fim.
20 Table 3. Logit models of deals. Full sample
Full sample consist of 7946 CEO-Year observations from 1999 to 2013. The models estimate probability of a target firms being taken over (at least 50,01% shares). Age6066 dummy variable receiving 1 if firms CEO is between 60 and 66 in the year offer is made. Ageyrs is age of target CEO. Pastcforatio is ratio of Independent NEDs with previous CFO or FD role to total Board. Ceosep is a dummy variable receiving 1 if non-executive Chairman is present on the board, 0 otherwise. Indep_direc is ratio of Independent directors in the Board. Publictrade is a dummy variable receiving 1 if firm is publicly traded, and 0 otherwise. Lognetworksize is natural log of number of connections a CEO has. Crisis0809 is a dummy variable receiving 1 if years when bid is made 2008 or 2009, 0 otherwise. Ageyrsq is age squared of a CEO. Ratioaudit is ratio of Independent NEDs in the Audit committee. Standard errors in parentheses.
21 Table 4. Logit Models on Completed Deals. Public Firms Sub-Sample.
Public firms sample consist of 4161 CEO-Year observations for models (9) to (11), 3967 for model (12), 3809 for model (13) and 3429 for model (14) between 1999 to 2013. The models estimate probability of a target firms being taken over (at least 50,01% shares). Age6066 dummy variable receiving 1 if firms CEO is between 60 and 66 in the year offer. Description of the rest of variables is given in Table 3 and Table 4. Standard errors in parentheses.
22 Table 5. Logit Model on Completed Deals. Full Sample. Interaction Effect
Full sample consist of 7946 CEO-Year observations from 1999 to 2013. The models estimate probability of a target firms being taken over (at least 50,01% shares). Age6066 dummy variable receiving 1 if firms CEO is between 60 and 66 in the year offer is made. Interaction terms is included for joint impact of corporate governance variables and retirement age impact. Description of the rest of the variables is given in Table 3. Standard errors in parentheses.
23 Table 6. Logit Model on Completed Deals. Public Firms Sample. Interaction Effect
24
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Appendix A
Table 7. Correlation Matrix for Public Firms Sub Sample
deals ageyrs age6066 pastcfo ratioaudit indepdirec ceosep crisis0809
log
networksize lnmveq wroa wroe wmb deals 1.00 age 0.02 1.00 age6066 0.04 0.51 1.00 pastcfo 0.05 0.02 -0.03 1.00 ratioaudit -0.01 0.06 -0.04 0.42 1.00 indepdirec -0.01 0.07 -0.03 0.49 0.88 1.00 ceosep 0.02 -0.08 -0.09 0.15 0.09 0.13 1.00 crisis0809 0.06 0.00 0.00 0.01 -0.05 -0.03 0.05 1.00 lognetworksize 0.03 0.02 -0.05 0.17 0.23 0.27 0.03 -0.04 1.00 lnmveq -0.02 0.01 0.02 -0.01 0.01 0.02 -0.02 -0.01 0.01 1.00 wroa -0.02 -0.01 0.00 0.00 0.01 0.01 -0.03 0.00 -0.03 0.39 1.00 wroe -0.04 -0.04 -0.03 -0.01 0.00 0.00 -0.02 -0.02 -0.01 0.38 0.58 1.00 wmb -0.01 0.01 0.00 0.00 0.00 0.01 0.00 0.01 -0.02 0.18 -0.04 -0.13 1.00
28 Table 8. Correlation Matrix for Bid Sample
ageyrs age6066 pastcfo ratioaudit indepdirec ceosep crisis0809 log
networksize lnmveq wroa wroe wmb ageyrs 1.00 age6066 0.56 1.00 pastcfo 0.07 0.08 1.00 ratioaudit 0.11 0.15 0.51 1.00 indepdirec 0.18 0.16 0.62 0.88 1.00 ceosep 0.05 0.11 0.12 0.08 0.15 1.00 crisis0809 -0.11 0.09 -0.07 0.07 -0.03 -0.11 1.00 lognetworksize 0.09 -0.05 0.14 0.15 0.25 -0.07 -0.23 1.00 lnmveq 0.06 -0.17 -0.09 -0.03 0.00 -0.08 -0.04 -0.01 1.00 wroa 0.04 0.00 0.03 -0.04 -0.03 -0.16 0.01 0.00 0.17 1.00 wroe -0.06 -0.15 -0.03 0.06 0.03 -0.18 0.05 -0.11 0.45 0.49 1.00 wmb 0.15 -0.03 0.04 0.07 0.12 0.15 -0.20 0.20 0.15 -0.10 -0.05 1.00
29 Table 9. Correlation Matrix for 60-66 Age Sub-Sample
deals ageyrs pastcfo ratioaudit indepdirec ceosep crisis0809 lnceonetw lnmveq wroa wroe wmb deals 1.00 Ageyrs -0.07 1.00 pastcfo 0.12 -0.13 1.00 ratioaudit 0.07 -0.08 0.43 1.00 indepdirec 0.07 -0.06 0.45 0.86 1.00 ceosep 0.10 -0.17 0.18 0.06 0.08 1.00 crisis0809 0.13 0.00 -0.02 -0.01 -0.02 0.04 1.00 lognetworksize 0.04 -0.02 0.13 0.18 0.22 -0.01 0.01 1.00 lnmveq -0.10 0.08 -0.01 -0.05 -0.01 -0.04 -0.04 0.07 1.00 wroa -0.03 0.04 0.05 -0.11 -0.08 -0.05 0.02 -0.06 0.43 1.00 wroe -0.11 0.02 0.02 -0.03 -0.01 -0.01 0.00 -0.01 0.40 0.66 1.00 wmb -0.03 -0.08 -0.03 -0.07 -0.06 0.00 -0.04 0.07 0.22 -0.03 -0.13 1.00
