Acquisition experience and director remuneration

Addis Gedefaw Birhanu (), Philipp Geiler, Luc Renneboog and Yang Zhao
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Addis Gedefaw Birhanu: EM - EMLyon Business School
Yang Zhao: University of Liverpool

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Abstract: We investigate whether acquisition experience of executive and non-executive directors is priced in their remuneration contracts. Acquisition experience generates a contractual premium, and the relative size of this premium is higher for non-executive directors than for executives. Only a director's track record related to past successful acquisitions is priced. Acquisition experience of a director is not remunerated if this type of experience is already abundantly present in the firm through the firm's past acquisition record (substitution effect). We verify the results by examining potential endogeneity concerns, by analyzing a broad set of measures of acquisition experience (such as industry-specific, broad or international experience, experience on a target's board), and by ruling out alternative explanations (such as a director's general skills level or reputation, the CEO's power and delegation attitude, and the firm's corporate governance quality).

Keywords: Directors; M&A; Takeovers; Mergers; remuneration contracting; Compensation; Experience; Human capital; skills (search for similar items in EconPapers)
Date: 2021-11-01
New Economics Papers: this item is included in nep-bec and nep-cfn
Note: View the original document on HAL open archive server: https://hal.science/hal-03464501
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Published in Journal of International Financial Markets, Institutions and Money, 2021, 75, 25 p. ⟨10.1016/j.intfin.2021.101356⟩

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Journal Article: Acquisition experience and director remuneration (2021)
Working Paper: Acquisition Experience and Director Remuneration (2020)
Working Paper: Acquisition Experience and Director Remuneration (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03464501

DOI: 10.1016/j.intfin.2021.101356

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