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Generalist VS Specialist:Lifetime Work Experience of CEOs and Mergers &Acquisitions
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TitleGeneralist VS Specialist:Lifetime Work Experience of CEOs and Mergers &Acquisitions  
AuthorXu Yan, Li Zhe, Xu Nianhang  
OrganizationSchool of Business, Renmin University of China;; 
Key WordsGeneral Ability Index; Specialized Skills; M&A Frequency; M&A Performance 
AbstractTalent is the first order determinant of economic growth. How to make good use of talents becomes a hot issue in financial research, especially after the CPC put forward the China's Medium- and Long-Term Talent Development Plan. By collecting the detailed information of 3730 CEOs’ personal resumes from 2002 to 2015 manually, the paper examines how general managerial ability, measured by General Ability Index (GAI), influences the behavior and performance of mergers and acquisitions (M&A hereafter). The results show that, first, compared with specialist CEOs, the generalist CEOs are better at conducting M&As. Firstly, generalist CEOs conduct more M&As. The conclusions still hold after a series of robust tests, including Heckman two-stage self-selection model, PSM sample regression, using the event of CEO turnovers, alternative GAI measure, as well as controlling for CEOs’ talent. Second, the generalist CEOs conduct the cross-industry or cross-region M&A more frequently, and most of which are related to the industries or provinces that generalist CEOs ever worked in. Secondly, M&As conducted by generalist CEOs get better short-term market reactions and long-term firm performance. This is mainly due to that the generalist CEOs attract more financial shareholders, strengthen the relationship with banks and recruite more independent directors with political connnections after the M&A. Further study shows that the generalist CEOs possess higher risk-taking preference, which drives them to engage in risky activities including the M&As. These results not only contribute to the literature on how personal working experience of CEOs influence corporate financial policies, but also have important practical implications for firms to select top managers and improve efficiencies of M&As. 
Serial NumberWP1236 
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