Executive Compensation of Large Acquirors in the 1980s
Journal of Corporate Finance, Vol. 4, No. 3, 1998
Posted: 9 Oct 1998
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: Suggested Citation