CEOs Appear to Have Little Faith in Their Companies’ Acquisitions

CEOs are 23.5% more likely to sell shares of their companies’ stock shortly after announcing acquisitions of other firms, a finding that suggests the executives have little faith in the value of the acquisitions, says a team led by Cynthia Devers of Michigan State University. “It wouldn’t make much sense” for CEOs to sell stock “if they truly felt that the company’s stock was going to appreciate,” Devers says of her research, which analyzed data involving more than 2,000 publicly traded firms over a 12-year period.

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