CEO Political Ideology -> M&A Premia 🔗
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Intro:
Moreover, in nearly 50% of the time the CEO is able and allowed to make such statements on his or her own accord, showing that the importance of a CEOs private political orientation is a highly relevant variable in practice as well.
- You address well that the CEO has opinions, but you should also make clear that these opinions matter, because the CEO has agency in firm policy! (agency theory)
- The first couple of sentences about information asymmetry as the foundation of agency theory are still a bit ad hoc
- But very good link between your question and the Shleifer and Vishny (2003) paper
However, there seems to exist no research that focusses specifically on a CEOs political ideology, the way this influences the perceived potential synergies and the premium the CEO is willing to pay on the back of this individual perception.
- It hasn’t been done before is not a motivation, try to make an argument that links ideology to expectations, which you already did with the incorrect valuation argument from S&V (2003)
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Literature Review is good
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Methodology: you listened well to my comments, but some sentences are still a bit artificial
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About fixed effects analysis and non-fixed effects analysis
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Below the regression model (3.2) should be definitions of the acquisition premium
- And also indicate how you change the definition throughout the analysis
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Last equations in 3.2 should be without $\mu_i$.
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Perhaps this is an accurate representation of how firms elect their CEOs, indicating that choosing a CEO is not a randomly distributed event, or, that Republican CEOs are more likely to engage in M&A activity
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Very important observation, this has implications for your analysis
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Effect of ideology may be stronger, because it also drivers the decision to do M&A at all, not only the price
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Results:
- Table 5 with separate rows for separate interaction effects
- I would also like to see the results for the sample without fixed effects, but with many control variables