CEO risk preference and M&A payment method: considering the non-economic factors

Purpose The authors investigate the effects of Chinese acquirer’s chief executive officer (CEO) risk preference on mergers and acquisitions (M&A) payment method and the moderating roles played by acquirer’s ownership, industry relatedness and whether the M&A is cross-border. Design/methodology/approach Using 4,624 worldwide M&A deals conducted by Chinese firms from 2009 to 2021, the authors conduct multiple linear regression and ordered probit regression. And comprehensive indexes constructed based on the observed features of acquirer’s CEOs are used to be the proxy for CEO risk preference. Findings The results show that the higher-level Chinese acquirer’s CEO risk preference is overall positively associated with using more stock in payment. Moreover, the above relationship is strengthened if the ownership of the acquirer is state-owned. Originality/value The authors highlight the importance of the non-economic factors and demonstrate a relationship between the Chinese acquirer’s CEO risk preference and the M&A payment method, providing support for and enriching the upper echelons theory (UET). Moreover, the unique risk priorities of Chinese acquirers’ CEOs are revealed.