Gene Expression

How’d that acquisition work out?

Lewis Is Said to Be Leaving Bank of America. Years ago I’d read that there was some social science which suggested that M&As were encouraged by the incentive structure of CEO careers; that is, the upside for a CEO in relation to a successful M&A are higher than for their firm. As for the downsides, the effect sizes are probably inverted. Steve Case & Gerald Levin might have their reputations in tatters, but they remain wealthy men. As for Time Warner….


  1. #1 Huxley
    October 3, 2009

    Actually, Case did extremely well for AOL stockholders. He took their widely overvalued stock and traded it for real assets in the form of Time Warner. If he hadn’t done that AOL shareholders would have fared much worse. Levin, on the other hand, was simply foolish.

  2. #2 Tushar
    October 10, 2009

    I’m finding it hard to disentangle the CEO’s legacy-and-empire incentives from the semi-coercion of the feds (Paulson and Bernanke) and their white lies to “save the system.” I wouldn’t leave those out of any analysis of the situation.

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