Ascribed Versus Achieved Social Status of CEOs and its Relationship with M&A Activities

Abstract

Using a sample of CEOs of FTSE companies during a ten-year period from 2001 to 2010, we explore merger and acquisition activities from the perspective of social status theory. It investigates the influence of CEO social status on the likelihood to conduct mergers and acquisitions, distinguishing between ascribed and achieved social status. Three proxies of ascribed social status are employed based on the level of prestige of secondary schools and universities attended by the CEO. The analysis of achieved social status involves three measures based on UK Honours and Britain?s Most Admired Companies awards. The empirical results provide strong evidence of a negative relationship between CEO ascribed and achieved social status and his or her acquisitiveness. However, the influence of achieved status appears to be more consistent and significant than that of the ascribed status, indicating its dominant role in determining overall attained status.