Takeover defenses, golden parachutes, and bargaining over stochastic synergy gains: a note on optimal contracting

Atreya Chakraborty (), Abdikarim Farah and John Barkoulas

European Journal of Finance, 2008, vol. 14, issue 4, pages 273-280

Abstract: We incorporate managerial risk aversion and stochasticity of takeover synergy gains into Harris' (Harris, E.G. 1990. Antitakeover measures, golden parachutes, and target firm shareholder welfare. Rand Journal of Economics 21, no. 4: 614-25. bargaining model for the coexistence of antitakeover defenses and golden parachutes in corporate charters. We show that: (i) it is not always optimal that the target-firm shareholders adopt antitakeover defenses, (ii) the size of the golden parachute is proportional to the riskiness of the synergistic gains, and (iii) the target-firm shareholders are unequivocally better-off with golden parachutes than takeover-contingent stock options.

Keywords: golden parachutes; antitakeover defenses; tender offers; mergers and acquisitions (search for similar items in EconPapers)
Date: 2008

Downloads: (external link)
http://www.informaworld.com/openurl?genre=article& ... 40C6AD35DC6213A474B5 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:taf:eurjfi:v:14:y:2008:i:4:p:273-280

Ordering information: This journal article can be ordered from
http://www.tandf.co.uk/journals/subscription.html

Access Statistics for this article

European Journal of Finance is edited by Chris Adcock

More articles in European Journal of Finance from Taylor and Francis Journals
Series data maintained by Christopher F. Baum ().