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    CEO Pay Disparity, Takeover Premiums and Bidder Performance in Australia: Efficient Contracting or Managerial Power

    84976.pdf (676.3Kb)
    Access Status
    Open access
    Authors
    Luong, Hoa
    Duong, Lien
    Evans, John
    Date
    2021
    Type
    Journal Article
    
    Metadata
    Show full item record
    Citation
    Luong, H. and Duong, T.H.L. and Evans, J. 2021. CEO Pay Disparity, Takeover Premiums and Bidder Performance in Australia: Efficient Contracting or Managerial Power. Accounting & Finance.
    Source Title
    Accounting & Finance
    DOI
    10.1111/acfi.12784
    ISSN
    0810-5391
    Faculty
    Faculty of Business and Law
    Curtin Dubai
    School
    School of Accounting, Economics and Finance
    Curtin Dubai
    URI
    http://hdl.handle.net/20.500.11937/85093
    Collection
    • Curtin Research Publications
    Abstract

    We compare acquiring firms’ CEO pay with that of the highest-paid non-CEO director and investigate the influence of CEO pay disparity on takeover premiums and bidder performance. Based on a takeover sample of Australian listed targets and bidders during the 2002–2015 period, we find that takeover premiums are significantly higher if the deals are processed by acquiring firms with higher CEO pay disparity. Although these firms do not receive favourable immediate market responses to their takeover announcements, they outperform in the long run. We find no evidence that offering a large takeover premium harms shareholders’ wealth. Overall, our findings largely support efficient contracting theory in the Australian M&A context.

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