Does threat of dismissal constrain acquisition premium in CEO pay?
Does threat of dismissal constrain acquisition premium in CEO pay?
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.
1349-1371
Homroy, Swarnodeep
bf9526ca-76e9-4d1f-8b8e-0be867b684f1
18 September 2015
Homroy, Swarnodeep
bf9526ca-76e9-4d1f-8b8e-0be867b684f1
Homroy, Swarnodeep
(2015)
Does threat of dismissal constrain acquisition premium in CEO pay?
Economica, 82 (Suppl. 1), .
(doi:10.1111/ecca.12163).
Abstract
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.
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Published date: 18 September 2015
Identifiers
Local EPrints ID: 499317
URI: http://eprints.soton.ac.uk/id/eprint/499317
ISSN: 0013-0427
PURE UUID: 349ec0ae-97ed-4987-b9cb-e07da34fb751
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Date deposited: 17 Mar 2025 17:30
Last modified: 15 Apr 2025 02:44
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Author:
Swarnodeep Homroy
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