INDEPENDENT DIRECTOR DEATH AND CEO ACQUISITIVENESS: BUILD AN EMPIRE OR PURSUE A QUIET LIFE?

Research summary: This study examines the relationship between an independent director's death and CEO acquisitiveness. Using a sample of large U.S. public firms, we find that CEOs who have experienced an independent director's death undertake fewer acquisitions in the post-director death period, in particular fewer large acquisitions. Our findings are consistent with the prediction of posttraumatic growth theory that mortality awareness can induce CEOs to reevaluate their life priorities and reduce the importance of extrinsic goals in their decision making. This study contributes to the strategic leadership literature by highlighting the influence of the death of CEOs' social peers on CEOs' strategic decisions. Managerial summary: Does the death of CEOs' social peers influence CEOs' strategic decisions? We find that CEOs who have experienced an independent director's death engage in fewer acquisitions in the post-director death period, in particular fewer large acquisitions. One likely explanation for our findings is that the death of an independent director may heighten CEOs' mortality awareness, lead the CEOs to pursue a quieter life, and weaken their propensities for undertaking decisions (i.e., acquisitions) that increase their compensation and social status. Copyright (C) 2016 John Wiley & Sons, Ltd.