Why Do Managers Undertake Acquisitions? An Analysis of Internal and External Rewards for AcquisitivenessChristopher N. Avery, Judith Chevalier () and Scott Schaefer Journal of Law, Economics and Organization, 1998, vol. 14, issue 1, pages 24-43 Abstract: We study the effect of a firm's acquisitions on the subsequent career of its chief executive officer (CEO) by examining a sample of executives who undertook large acquisitions between 1986 and 1988. We find that acquirers do not have significantly different compensation growth from executives who did not undertake acquisitions. Further, we find the effect of acquisitions on compensation does not depend on whether the acquisition increased shareholder wealth, nor on whether the acquisition was diversifying. We do find a benefit to acquisitions, however, because CEOs who completed acquisitions are significantly more likely to gain outside directorships than those who did not complete acquisitions. Our results do not support the argument that CEOs have an incentive to pursue acquisitions in order to increase their own compensation, but lend support to the argument that CEOs have an incentive to pursue acquisitions to increase their prestige and standing in the business community. Copyright 1998 by Oxford University Press. Date: 1998 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:oup:jleorg:v:14:y:1998:i:1:p:24-43 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Law, Economics and Organization is edited by Ian Ayres More articles in Journal of Law, Economics and Organization from Oxford University Press |
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