What S in it for Me? Ceos Whose Firms are Acquired

37 Pages Posted: 3 Nov 2008

See all articles by Jay C. Hartzell

Jay C. Hartzell

University of Texas at Austin - Department of Finance

Eli Ofek

New York University (NYU) - Department of Finance

David Yermack

New York University (NYU) - Stern School of Business

Date Written: May 2001

Abstract

We study benefits received by target company CEOs in completed mergers and acquisitions. These executives obtain wealth increases with a median of $4 to $5 million and a mean of $8 to $11 million, roughly in line with the permanent income streams that they sacrifice. CEOs receive lower financial gains from those transactions in which they become executives of the buyer, suggesting that tradeoffs exist between the financial and career-related benefits they extract. We find very high rates of turnover both at the time of the merger and, for those executives who stay, for several years post-merger. Regression estimates suggest that target shareholders receive lower acquisition premia in transactions that involve extraordinary personal treatment of the CEO.

Suggested Citation

Hartzell, Jay C. and Ofek, Eli and Yermack, David, What S in it for Me? Ceos Whose Firms are Acquired (May 2001). NYU Working Paper No. FIN-01-049, Available at SSRN: https://ssrn.com/abstract=1294594

Jay C. Hartzell (Contact Author)

University of Texas at Austin - Department of Finance ( email )

1 University Station B6600
Austin, TX 78712
United States
512-471-6779 (Phone)
512-471-5073 (Fax)

HOME PAGE: http://www.mccombs.utexas.edu/faculty/jay.hartzell/

Eli Ofek

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

David Yermack

New York University (NYU) - Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY 10012-1126
United States
212-998-0357 (Phone)
212-995-4220 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~dyermack

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