Age and Acquisitiveness: CEO Characteristics and Acquisition Propensity in the UK and Nordic Markets

Sammanfattning

This paper examines whether CEO age and tenure predict large acquisition propensity among large-cap listed firms in the UK and Nordic countries (Sweden, Norway, Finland, and Denmark) over the period 2010-2025. Using a panel of about 350 firms and following the methodology of Zhang et al. (2016), large acquisition propensity is defined as a binary indicator equal to one when the value of a completed acquisition in a given firm-year exceeds five percent of the acquirers’ market capitalization. We estimate logit models with year and Fama-French 12 industry fixed effects, using CEO age and tenure as primary independent variables and controlling for firm size, logged assets, market-to-book, firm age, prior year return, and cash flow. Results are mixed across regions. For UK-listed firms, CEO age shows no statistically significant relationship with acquisition propensity, while shorter CEO tenure is associated with a higher odds of acquisition. For Nordic firms the opposite pattern holds, CEO age is negatively associated with acquisition propensity, consistent with signaling-incentive hypothesis, while tenure shows no significant effect. Index-level regressions reveal further heterogeneity, with significant age effects in OBX and OMXS30 (Norwegian and Swedish) samples but not in the Danish or Finnish indices, likely reflecting limited statistical power due to smaller subsamples. The findings show partial support for signaling-incentive driven acquisition behavior among younger or shorter-tenured CEOs, but results vary across markets.