CEO tenure, boards of directors, and acquisition performance

We explore the impact of CEO tenure on returns to shareholders arising from acquisition announcements. Further, we consider the value added for shareholders when the board of directors is composed in such a way as to enhance vigilance. In the absence of a vigilant board, CEO tenure is positively associated with performance at low to moderate levels of tenure, and negatively associated with performance when tenure further rises to substantial levels. In the presence of a vigilant board, however, shareholder interests can be advanced even at high levels of CEO tenure. (C) 2006 Elsevier Inc. All rights reserved.