Does Threat of Dismissal Constrain Acquisition Premium in CEO Pay? | Zendy

Homroy Swarnodeep | Zendy

AI Assistant Blog Pricing

Home ZAIA Blog

Premium

Does Threat of Dismissal Constrain Acquisition Premium in CEO Pay?

Author(s) -

Homroy Swarnodeep

Publication year - 2015

Publication title -

economica

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 1.532

H-Index - 65

eISSN - 1468-0335

pISSN - 0013-0427

DOI - 10.1111/ecca.12163

Subject(s) - dismissal , shareholder , incentive , business , constraint (computer aided design) , control (management) , mechanism (biology) , actuarial science , economics , microeconomics , finance , corporate governance , management , law , political science , engineering , philosophy , epistemology , mechanical engineering

This paper shows that the likelihood of post‐acquisition CEO turnover can act as a constraint on risky acquisition decisions. The acquisition premium in pay decreases by over 50% once the dismissal risk is controlled for. Given a smaller pay premium for undertaking acquisitions and a non‐zero risk of dismissal, shareholders are shown to be able to exercise some control over managerial incentives to engage in risky acquisitions through the mechanism for dismissal.

This content is not available in your region!

Continue researching here.

Having issues? You can contact us here

Accelerating Research