Impact of Acquisition on CEO Pay



HomRoy, Swarnodeep (2012) Impact of Acquisition on CEO Pay. Journal of Business and Economic Statistics. ISSN 0735-0015, ESSN: 1537-2707 (In Press)

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Abstract

We examine the impact of acquisition on the pay of CEOs of S&P 1500 �rms from 1994-2010. We �nd insigni�cant e¤ect of �rm performance on post-acquisition CEO pay. Controlling for �rm size, CEOs are paid about 3.5-4% premium in post-acquisition pay, which increases the pay of the median CEO of an acquiring �rm in the sample by US$ 1,73,000. We �nd no evidence of di¤erential pay increase for domestic and international acquisitions. Post-acquisition increase in CEO pay is not contingent on the wealth e¤ects and CEOs are not penalized for �wealth-reducing� acquisitions. Our results suggest that a part of acquisition premium in CEO pay can be attributed to the strength of governance. Controlling for survivor bias, we observe a smaller acquisition premium in CEO pay.

Item Type: Article
Divisions: School of Arts, Social Sciences and Management > Business, Enterprise & Management
Date Deposited: 13 Dec 2012 12:23
Last Modified: 19 Mar 2014 13:00
URI: http://eresearch.qmu.ac.uk/id/eprint/3051

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