Executive Compensation of Large Acquirors in the 1980s

Journal of Corporate Finance, Vol. 4, No. 3, 1998

Posted: 9 Oct 1998

See all articles by Ajay Khorana

Ajay Khorana

Georgia Institute of Technology - Finance Area

Marc Zenner

Citigroup, Inc. - Investment Banking Division

Abstract

To examine the role of executive compensation in corporate acquisition decisions, we compare the compensation of top executives in two groups of firms: firms undertaking large acquisitions and a control sample of non-acquirors. Before the acquisition, we find a positive relation between firm size and compensation for executives of acquirors. However, we do not find such a relation for non-acquirors. This result suggests an ex ante expectation that larger firm size for the acquirors will result in larger managerial compensation. Ex post, however, the increase in total compensation is not attributable to the size increase resulting from the acquisition. In separating good from bad acqusitions, we find that good acquisitions increase compensation. However, bad acquisitions do not have a material impact on executive compensation.

Note: The following is a description of the paper and not the actual abstract.

JEL Classification: G34, J31, J44

Suggested Citation

Khorana, Ajay and Zenner, Marc, Executive Compensation of Large Acquirors in the 1980s. Journal of Corporate Finance, Vol. 4, No. 3, 1998, Available at SSRN: https://ssrn.com/abstract=135629

Ajay Khorana (Contact Author)

Georgia Institute of Technology - Finance Area ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States
404-894-5110 (Phone)
404-894-6030 (Fax)

Marc Zenner

Citigroup, Inc. - Investment Banking Division ( email )

Salomon Smith Barney
388 Greenwich St., 24th Flr
New York, NY 10013
United States

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