Paper Title
Retention Effects in Post-Acquisition Strategic and Social Contexts: A Closer Look at How Retained Target Firm Executives Affect Acquisition Performance

This study examines how post-acquisition firm performance is affected by the decision of retaining executives who used to work at the target in the combined new firm. We focused on three dimensions of the retention decision: (1) whether or not one or more target firm executives are retained in the combined firm; (2) average tenure of the retained executives with the target firm before they join the combined firm; and (3) the new job positions of the retained executives in the combined firm. We also examined the strategic and social contexts where retained executives’ knowledge is more likely to complement knowledge possessed by acquiring firms’ executives and when retained executives are more motivated to apply their knowledge. Using a sample of large acquisitions by U.S. manufacturing companies, we provide empirical evidence that the positive effects of executive retention on post-acquisition performance are stronger when the acquiring and the acquired firms are from unrelated industries and when the target firms are relatively small. Theoretical and managerial implications of these findings are discussed. Keywords - Acquisition performance, executive retention, top management teams, the resource-based view,contingency perspective