Executive compensation and firm risk after successful mergers and acquisitions in Africa

Godfred Amewu and Imhotep Alagidede ()

Managerial and Decision Economics, 2019, vol. 40, issue 6, 672-703

Abstract: This paper examines the impact of various executive compensation types on the postmerger risk taking by firm's executives. We find that executive pay influences firm risk differently depending on compensation type and risk measure. Specifically, we find that rewarding executives with cash compensation reduces the total postmerger risk of acquirers. However, managers are motivated to increase systematic risk when they are rewarded with stock‐based incentives. Besides, based on the argument that managerial compensation portfolio might impact systematic and unsystematic risks differently, our findings show no evidence of the impact of executive pay on unsystematic risk.

Date: 2019
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https://doi.org/10.1002/mde.3037

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:40:y:2019:i:6:p:672-703

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