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Motivated to acquire? The impact of CEO regulatory focus on firm acquisitions

Version 2 2024-06-07, 00:33
Version 1 2017-01-24, 11:45
journal contribution
posted on 2024-06-07, 00:33 authored by DL Gamache, G McNamara, MJ Mannor, RE Johnson
Regulatory focus theory proposes that decision making and goal pursuit occur via either a promotion focus (a sensitivity to gains and a desire for advancement and growth) or a prevention focus (a sensitivity to losses and a desire for stability and security). Recent theorizing in strategic management research suggests that there may be important firm-level outcomes influenced by the regulatory focus of top executives. We expand research on regulatory focus theory by testing whether chief executive officers’ (CEOs’) regulatory focus impacts the proclivity of firms to undertake acquisitions. Furthermore, regulatory focus theory suggests that the effects of people’s promotion and prevention foci are magnified when their regulatory focus is congruent with salient situational characteristics, a phenomenon known as regulatory fit. As a test of this idea, we demonstrate how the effects of CEO promotion and prevention foci are differentially impacted by one such characteristic, namely incentive compensation. Our findings indicate that CEO regulatory focus impacts both the quantity and scale of acquisitions undertaken by a firm. We also find some support for our arguments that these relationships are moderated by stock option pay.

History

Journal

Academy of management journal

Volume

58

Pagination

1261-1282

Location

Briarcliff Manor, N.Y.

ISSN

0001-4273

eISSN

1948-0989

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal, C Journal article

Copyright notice

2015, Academy of Management

Issue

4

Publisher

Academy of Management