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Frequent acquirers and management compensation

Chandra S. Mishra

Managerial and Decision Economics, 2020, vol. 41, issue 5, 661-694

Abstract: We find positive contemporaneous, short‐, and long‐run effects of an increase in the acquisition rate on management compensation. A positive bidirectional causality exists between acquisition frequency and management compensation. A higher firm value is likely to associate with higher acquisition frequency. Acquisition rate has a positive impact on the market share. Acquirers with lower market share are more likely to become frequent acquirers. A causal order follows from lower market share to higher acquisition frequency to higher firm value to higher management compensation. The impact of acquisition frequency on management compensation is higher for value‐enhancing acquirers relative to value‐destroying acquirers.

Date: 2020
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Handle: RePEc:wly:mgtdec:v:41:y:2020:i:5:p:661-694