CEO Pay Disparity, Takeover Premiums and Bidder Performance in Australia: Efficient Contracting or Managerial Power
Embargo Lift Date
MetadataShow full item record
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.
Showing items related by title, author, creator and subject.
The Impact of Market Optimism and CEO Pay Disparity on Takeover Premium and Bidder Performance: Australian EvidenceLuong, Hoa Anh Thi (2018)The study explains the impact of market optimism and CEO pay disparity on takeover premium and bidder performance in Australia. The study finds that acquiring firms offer higher premiums when takeover deals are conducted ...
Bartrop, Stephen Bruce (2010)Resource acquisitions have added value to resource companies over the past two decades. This stems from the results of this research which has analysed 30 transactions and further reviewed 22 transactions with a total ...
Duong, Lien; Izan, H. (2012)This paper uses Australian data to analyze takeover bid premiums and long-term abnormal returns for mergers that occur during wave and non-wave periods. Findings reveal that bid premiums are slightly lower in wave periods, ...