Contractual revisions in compensation: Evidence from merger bonuses to target CEOs

• 成果类型: Article
• 署名作者: Fich, Eliezer M.; Rice, Edward M.; Tran, Anh L.
• 署名单位: Drexel University; University of Washington; University of Washington Seattle; City St Georges, University of London
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2015.12.002
• 发表日期: 2016
• 关键词: executive decision-making; corporate governance; earnings management; golden parachutes; synergistic gains; firm; performance; QUALITY; incentives; OWNERSHIP

摘要

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. (C) 2015 Elsevier B.V. All rights reserved.