The Role of Human Capital in Postacquisition CEO Departure

Abstract

In this study, we examined the postacquisition departure of target firms' CEOs and found support for the predictions of human capital theory. Firms and CEOs appear to weigh the costs of firm-specific CEO human capital investment against (1) the window of time available for returns from that investment and (2) the perceived value of those returns. CEO age and acquisition relatedness were both significantly related to the rate of CEO postacquisition departure.