Decision-Making in Acquisitions: The Effect of Outside Directors' Compensation on Acquisition Patterns

Item Type Journal paper
Abstract

This article examines how the compensation paid for outside directors affects firms' acquisition behavior. Using panel data of Standard & Poor's 1500 firms between 1996 and 2002, the authors find that stock and stock option pay for outside directors are related in an inverted U-shaped manner to a firm's acquisition rate and that for stock options, this relationship is moderated by board composition. Their findings suggest a dual agency model of corporate governance, according to which not only executives' incentives but also outside directors' incentives should be aligned with the shareholder value creation.

Authors Deutsch, Yuval; Keil, Thomas & Laamanen, Tomi
Journal or Publication Title Journal of Management
Language English
Subjects business studies
HSG Classification contribution to scientific community
Refereed Yes
Date 1 February 2007
Publisher Sage Publ.
Place of Publication Thousand Oaks, Calif.
Volume 33
Number 1
Page Range 30-56
Number of Pages 27
ISSN 0149-2063
ISSN-Digital 1557-1211
Depositing User Prof. Dr. Tomi Laamanen
Date Deposited 25 Jan 2013 15:49
Last Modified 23 Aug 2016 11:15
URI: https://www.alexandria.unisg.ch/publications/219939

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Citation

Deutsch, Yuval; Keil, Thomas & Laamanen, Tomi (2007) Decision-Making in Acquisitions: The Effect of Outside Directors' Compensation on Acquisition Patterns. Journal of Management, 33 (1). 30-56. ISSN 0149-2063

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https://www.alexandria.unisg.ch/id/eprint/219939
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