Date of Award

Summer 8-2020

Document Type


Degree Name

Doctor of Philosophy (PhD)




Business Administration -- Finance

Committee Director

John A. Doukas

Committee Member

Robert M. McNab

Committee Member

Mohammad Najand

Committee Member

David D. Selover


This dissertation consists of three distinct essays on the effects of CEO dismissal risk on M&A megadeal decisions, the association between CEO compensation and generalist managerial ability in the presence of CEO dismissal risk, and the alignment of the initial compensation of new CEOs following CEO dismissals with their managerial ability.

In Essay 1, I study the link between CEO dismissal risk and risky M&A decisions and find that higher-dismissal-risk CEOs engage in more M&A megadeals than their counterparts. Such megadeal transactions lead to lower acquirer post-M&A abnormal returns, suggesting that risky investment decisions are driven by CEOs’ career concerns. My evidence also shows that higher-dismissal-risk CEOs face a higher likelihood of being dismissed when they undertake value-destroying M&A transactions.

Essay 2 examines a possible reason for the generalist pay premium documented in prior studies. I do not find any evidence showing that generalists deliver better performance than specialists. My results show that generalist CEOs are more likely to be dismissed than their counterparts, and they do not receive higher compensation once I control for their dismissal risk. Thus, the so-called generalist premium is to compensate for their higher dismissal risk and not for their higher value in the executive labor market.

Essay 3 investigates the antecedents of the initial pay packages of new CEOs who are hired to replace dismissed CEOs. I find that managerial ability has a significant and positive effect on CEO pay in the sample of post-dismissal new CEOs. My results also show that post-dismissal new CEOs are offered higher pay levels than dismissed CEOs, suggesting that, following CEO dismissals, the boards of directors are effective in offering new CEOs compensation that matches their managerial ability.







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