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Director Compensation Incentives and Acquisition Outcomes

  • Ismail LahlouEmail author
Chapter

Abstract

The principal objective of this chapter is to investigate the relation between director compensation structure and shareholder interests in the context of acquisitions. Our evidence suggests that acquirer firms that compensate their directors with a higher proportion of incentive-based compensation have significantly higher stock returns around the announcement. An increase in director equity-based pay results in a lower probability of value-destroying acquisitions and a lower acquisition premium for targets. We further find that acquirers with higher equity-based pay exhibit greater improvements in stock price and operating performance following acquisitions.

Keywords

Board of directors Compensation Director incentives Acquisitions Bargaining power Agency theory 

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Copyright information

© The Author(s) 2018

Authors and Affiliations

  1. 1.University of BurgundyAuxerreFrance

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