Serial takeovers, large shareholders, and CEOs’ equity-based compensation

E.S. Pikulina, L.D.R. Renneboog

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

1 Citation (Scopus)

Abstract

In this chapter we investigate how the structure of a CEO’s compensation package – and especially his bonus and equity-based compensation (EBC) – influences his M & A decisions. We find that a CEO with a higher proportion of EBC is more likely to initiate (serial) acquisitions. Likewise, a CEO who receives a larger bonus is more eager to be involved in takeovers. We argue that equity-based compensation along with strong performance requirements (stock options and restricted stock become vested only if specific performance criteria are met) induce managers to adopt aggressive growth strategies through M & As. Large outside shareholders reduce a firm’s takeover activity, which is also the case when a CEO holds a significant equity stake.
Original languageEnglish
Title of host publicationThe Research Handbook on Shareholder Power
EditorsJ. Hill, R. Thomas
Place of PublicationCheltenham
PublisherEdward Elgar Publishing Ltd.
Pages297-318
ISBN (Electronic)9781782546856
ISBN (Print)9781782546849
DOIs
Publication statusPublished - 31 Jul 2015

Publication series

NameResearch Handbooks in Corporate Law and Governance Series

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  • Cite this

    Pikulina, E. S., & Renneboog, L. D. R. (2015). Serial takeovers, large shareholders, and CEOs’ equity-based compensation. In J. Hill, & R. Thomas (Eds.), The Research Handbook on Shareholder Power (pp. 297-318). (Research Handbooks in Corporate Law and Governance Series). Edward Elgar Publishing Ltd.. https://doi.org/10.4337/9781782546856.00028