The retention of CEOs that make poor acquisitions

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					The retention of CE
				
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Description: Does the failure to replace CEOs following a bad takeover represent a cost-effective strategy or a failure of boards of directors and the market? We study 104 white knight contests to examine why poorly performing firms retain their CEOs. We find the majority are poor performers before they enter the control contest (q1), in the control contest, and after the control contest. We compare the costs of replacing CEOs with the benefits of keeping them. Our results show the market works. The benefits of keeping CEOs under such circumstances are greater than the costs of replacement. Thus, keeping poorly performing CEOs does not represent a failure of a firm's board. [PUBLICATION ABSTRACT]
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