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What's In It for Me? CEOs Whose Firms Are Acquired

Jay C. Hartzell¹; Eli Ofek²; David Yermack²

¹ The University of Texas at Austin · ² New York University

We study benefits received by target chief executive officers (CEOs) in completed mergers and acquisitions. Certain target CEOs negotiate large cash payments in the form of special bonuses or increased golden parachutes. These negotiated cash payments are positively associated with the CEO's prior excess compensation and negatively associated with the likelihood that the CEO becomes an executive of the acquiring company. Regression estimates suggest that target shareholders receive lower acquisition premia in transactions involving extraordinary personal treatment of the CEO. Target CEOs experience very high turnover rates both at the time of acquisition and, for those who remain employed, for several years thereafter.

DOI

10.1093/rfs/hhg034

Volume

17 (1)

Pages

37-61

Language

en

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BibTeX

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