Abstract

http://ssrn.com/abstract=1108721
 
 

References (32)



 
 

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Pay for Performance? CEO Compensation and Acquirer Returns in BHCs


Liu Yang


University of Maryland, R. H. Smith School of Business

Haluk Unal


University of Maryland - Robert H. Smith School of Business

Kristina Minnick


Bentley University

January 30, 2010


Abstract:     
We examine the impact of managerial incentives on acquisitions in the banking industry. We find that banks whose CEOs have higher pay-for-performance sensitivity (PPS) are less likely to engage in value-reducing acquisitions. Conditional on engaging in acquisitions, those higher-PPS banks have significantly better announcement returns: on average these banks outperform the acquirers in the lower-PPS group by $1.4% in a three-day window around the announcement. The positive market reaction can be rationalized by long-term performance. Following acquisitions, banks with high PPS experience greater improvement in their operating performance as measured by ROA.

Number of Pages in PDF File: 39

Keywords: Pay-for-Performance Sensitivity, CEO Compensation, Acquirer Returns

JEL Classification: G34, G21

working papers series


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Date posted: March 25, 2008 ; Last revised: April 5, 2011

Suggested Citation

Yang, Liu and Unal, Haluk and Minnick, Kristina, Pay for Performance? CEO Compensation and Acquirer Returns in BHCs (January 30, 2010). Available at SSRN: http://ssrn.com/abstract=1108721 or http://dx.doi.org/10.2139/ssrn.1108721

Contact Information

Liu A. Yang
University of Maryland, R. H. Smith School of Business ( email )
4420 Van Munching Hall
R.H.Smith School of Business
College Park, MD 20742
United States
3014055295 (Phone)
Haluk Unal
University of Maryland - Robert H. Smith School of Business ( email )
College Park, MD 20742-1815
United States
301-405-2256 (Phone)
301-405 0359 (Fax)
Kristina Minnick (Contact Author)
Bentley University ( email )
175 Forest Street
Waltham, MA 02154
United States
HOME PAGE: http://www.profminnick.com/
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References:  32
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