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Managerial Ownership, the Method of Payment for Acquisitions, and Executive Job Retention
Author(s) -
Ghosh Aloke,
Ruland William
Publication year - 1998
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/0022-1082.325125
Subject(s) - business , payment , stock (firearms) , cash , enterprise value , control (management) , value (mathematics) , accounting , finance , monetary economics , economics , management , mechanical engineering , machine learning , computer science , engineering
ABSTRACT This study investigates how acquiring and target firm managers' preferences for control rights motivate the payment for corporate acquisitions. We expect that managers of target firms who value influence in combined firms will prefer to receive stock. One reason top managers desire influence is to enhance their chances of retaining jobs in the combined firm. Our analysis shows a strong, positive association between managerial ownership of target firms and the likelihood of acquisitions for stock. We also find that managers of target firms are more likely to retain jobs in combined firms when they receive stock rather than cash.