Fich, E. M., Rice, E. & Tran, A. (2016). Contractual revisions in compensation: evidence from merger bonuses to target CEOs. Journal of Accounting and Economics, 61(2-3), pp. 338-368. doi: 10.1016/j.jacceco.2015.12.002
- Accepted Version
Restricted to Repository staff only until 21 December 2017.
Available under License : See the attached licence file.
Download (319kB) | Request a copy
Text (Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Licence)
Download (201kB) | Preview
Do merger bonuses to target CEOs facilitate a wealth transfer from target to acquirer shareholders? We test this hypothesis against an alternative that bonuses enable a useful contractual revision in compensation contracts when takeovers generate small synergies. When target CEOs get a merger bonus, acquirers pay lower premiums, but they also typically get less in the form of low synergies. Moreover, both stock and accounting returns to the acquirers are lower on average in deals with target CEO bonuses. These results support the contractual revision alternative. Nevertheless, wealth transfer occurs when merger bonuses are present in deals where targets exhibit high pre-takeover abnormal accruals or are subject to SEC enforcement actions.
|Additional Information:||© 2016 Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/|
|Uncontrolled Keywords:||Merger bonus; Acquisitions; Synergies; Wealth transfer; Abnormal accruals; SEC enforcement actions|
|Subjects:||H Social Sciences > HF Commerce|
|Divisions:||Cass Business School|
Actions (login required)
Downloads per month over past year