Golden Parachutes, Shark Repellents, and Hostile Tender Offers

Charles R Knoeber

American Economic Review, 1986, vol. 76, issue 1, 155-67

Abstract: A common view of golden parachutes and shark repellents is that they are designed by management to insulate itself from the discipline imposed by the market for corporate control and so are harmful to shareholders. This paper offers an alternative view that these devicesare beneficial to shareholders because they allow better contracting between manager and shareholders. Evidence on the incidence of goldenparachutes and on the compensation-tenure relationship for managers of golden parachute firms supports the alternative view. Copyright 1986 by American Economic Association.

Date: 1986
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