The effects of corporate acquisitions on CEO compensation and CEO turnover of family firms

Cesari, Amedeo De; Gönenç, Halit; Ozkan, Neslihan

doi:10.1016/j.jcorpfin.2016.01.017

Cited by 40 publications

(31 citation statements)

References 69 publications

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“…This study also adds to previous research by investigating dual-class shares as a potential driver of CEO pay. Previous research documents a positive association between the level of CEO compensation and dual-class shares (Masulis et al 2009;Amoako-Adu et al 2011;De Cesari et al 2016). In this paper, I investigate the potential impact of dual-class shares on pay-performance sensitivity.…”

Section: Introductionmentioning

confidence: 96%

Agency conflicts, executive compensation regulations and CEO pay-performance sensitivity: evidence from Sweden

Cieslak

2018

J Manag Gov

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Based on a unique country set up with concentrated ownership of firms, strong representation of major shareholders on boards and one of the highest percentages of firms with dual-class shares worldwide I study CEO pay-performance sensitivity in Swedish listed firms in the years 2001-2013. Focusing on Type II agency conflict, I find that that pay-performance sensitivity in family-controlled firms with family CEOs is significantly lower than in other types of firms, and that dual-class firms have significantly lower sensitivity of pay to accounting performance than non-dual-class firms. The results suggest that in firms with type II agency conflicts compensation practices may be driven either by family ties or by the power preferences of the controlling shareholder that uses compensation to align CEO's interest with his/her will rather than with financial performance. The study also documents that the link between CEO pay and performance disappears in the 2010-2013 period following the implementation of the European Recommendations regarding executive compensation. This finding is in contrast to the stipulated goal of the European Commission, 'to ensure pay for performance' (European Commission 2009).

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Section: Introductionmentioning

confidence: 96%

Agency conflicts, executive compensation regulations and CEO pay-performance sensitivity: evidence from Sweden

Cieslak

2018

J Manag Gov

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“…Ozkan () shows that CEOs receive a substantial increase in compensation when they acquire foreign targets. De Cesari et al () show that amily firms CEOs do not receive a significant increase in compensation, compared with their counterparts in nonfamily firms. We did not examine the effects for family versus nonfamily firms.…”

Section: Resultsmentioning

confidence: 99%

“…Their results contrast with Guest () who shows that an acquirer's CEO pay changes are not affected by target nationality. De Cesari, Gonenc, and Ozkan () compares family firm acquirers with nonfamily firm acquirers. The authors show that family firm CEOs do not experience an increase in their compensation following acquisition activities, whereas nonfamily firm CEOs experience a substantial increase in compensation in the postacquisition period, suggesting that CEOs in family firms, unlike nonfamily firms, would not have the discretion to pursue acquisitions in an opportunistic way to receive personal gain.…”

Section: Related Literaturementioning

confidence: 99%

Frequent acquirers and management compensation

Mishra

2020

Manage Decis Econ

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We find positive contemporaneous, short-, and long-run effects of an increase in the acquisition rate on management compensation. A positive bidirectional causality exists between acquisition frequency and management compensation. A higher firm value is likely to associate with higher acquisition frequency. Acquisition rate has a positive impact on the market share. Acquirers with lower market share are more likely to become frequent acquirers. A causal order follows from lower market share to higher acquisition frequency to higher firm value to higher management compensation. The impact of acquisition frequency on management compensation is higher for value-enhancing acquirers relative to value-destroying acquirers.for good (value-enhancing) acquirers but does not change for bad (value-destroying) acquirers. However, Harford and Li (2007) show CEO compensation is insensitive to acquirer performance. Avery, Chevalier, and Schaefer (1998) show no significant difference in CEO's equity compensation between acquirers and nonacquirers. Avery et al. find no difference in the relation between CEO compensation and acquisition decisions for both good and bad acquirers. Moreover, Guest (2009) find a transitory positive effect of an

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“…This leads to the merger's inability to enhance the competitiveness of the company and drag down the operation of the company [11]. Compared with the cash payment method, stock payment can effectively reduce the financial risk and information asymmetry risk caused by mergers and acquisitions [12]. In the case of M&A of GEM companies, a lot of enterprises have higher valuations.…”

Section: A Corporate Mergers and Acquisitions Goodwill And Financialmentioning

confidence: 99%

Empirical Analysis of Financial Risks of Corporate M&A Based on Big Data

Deng¹

2019

Proceedings of the 2019 3rd International Conference on Education, Economics and Management Research (ICEEMR 2019)

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In order to study the relationship between goodwill and financial risk, and the role of corporate executives in controlling the relationship between the two, this paper took the 2013-2017 data of GEM listed companies as a sample, and used the statistical analysis tool of STATA. The paper firstly established the multiple regression model, then carried on the correlation analysis and the regression analysis, finally carried on the robustness test. The results show that there is a significant positive correlation between the merger goodwill and financial risk of the enterprise. In addition, executive holdings significantly weaken this positive correlation. What is unique about this paper is that few scholars use the "goodwill" of listed companies on the GEM as a variable to examine the relationship.

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The effects of corporate acquisitions on CEO compensation and CEO turnover of family firms

Cited by 40 publications

References 69 publications

Agency conflicts, executive compensation regulations and CEO pay-performance sensitivity: evidence from Sweden

Agency conflicts, executive compensation regulations and CEO pay-performance sensitivity: evidence from Sweden

Frequent acquirers and management compensation

Empirical Analysis of Financial Risks of Corporate M&A Based on Big Data

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