We build it up, build it up, and now it’s solid, solid as a rock
The busy folks at the Harvard Law School Forum on Corporate Governance and Financial Regulation — the name keeps getting longer — posted a paper Monday with the provocative title: “Do Envious CEOs Cause Merger Waves?” The study, by DePaul finance professor Anand Goel and Washington University in St. Louis finance prof Anjan Thakor, puts forth the theory that CEOs engage in merger activity out of envy of other CEOs who have boosted their company’s size through M&A and thus succeeded in raking in more pay for themselves. Not only that, but that powerful engine of envy is perfectly capable, they argue, of being set off by what they describe as an “idiosyncratic shock,” which seems to be defined as anything that’s not envy-driven, and which then creates a kind of cascade of greedy longing, as one CEO after another engages in a feverish attempt to keep up with the Joneses.
