A&M-Kingsville business assistant professor has paper mentioned in Wall Street Journal

KINGSVILLE - September 14, 2017

Contact: Julie Navejar
Email: julie.navejar@tamuk.edu
or Phone: 361-593-2590


Dr. Dongnyoung Kim, assistant professor of finance in the College of Business at Texas A&M University-Kingsville, was honored to have a paper he wrote with a colleague referenced in a recent story in the Wall Street Journal.

The paper, entitled CEO Political Ideology, and Mergers and Acquisitions Decision, is about how CEO political ideology has an impact on the decision-making process, particularly in mergers and acquisitions, Kim said. It was originally part of his dissertation and was developed with Dr. Ahmed Elnahas, assistant professor of finance at Eastern Kentucky University.

 “With CEO data from 1993 to 2006, we identified that a firm’s investment decisions vary with their own political ideology,” he said. “More specifically, we found that Republican-leaning CEOs are less likely to engage in merger and acquisitions activities and when they do undertake acquisitions, they are more likely to use case as the method of payment and their targets are more likely to be public firms and to be from the same industry.”

 “Also, Republican CEOs tend to avoid high information asymmetry acquisitions that involve the use of ‘earn out’ clauses.  Conditional on the merger, CEO political ideology appears to have a significant impact on long-run firm valuation,” Kim said.

“One thing we have to be careful about is that our results do not mean that Republican CEOs are superior to others, but they are more conservative and more careful in making decisions, resulting in a better performance,” he added.

The Wall Street Journal story, Grand Old Purchase: Republican-Run Companies do Better with Acquisitions, was written by reporter Deborah Gage.

-TAMUK-