Do CEOs Gain More in Foreign Acquisitions than Domestic Acquisitions?

Journal of Banking and Finance, Forthcoming

51 Pages Posted: 10 Feb 2010 Last revised: 6 Dec 2011

See all articles by Neslihan Ozkan

Neslihan Ozkan

University of Bristol - School Accounting and Finance, U.K.

Date Written: December 5, 2011

Abstract

This paper examines the impact of domestic and foreign acquisitions on chief executive officer (CEO) compensation packages using a sample of 147 completed bids by UK companies from 1999 to 2005. We find that foreign acquisitions lead to higher CEO compensation than domestic acquisitions. Overall, our findings suggest that CEOs have strong incentives to do foreign acquisitions rather than domestic acquisitions since they receive larger compensation following a foreign acquisition regardless of how poor firm performance is. Furthermore, we observe a positive and significant relation between CEO compensation and firm size during the pre-acquisition period for firms involved in foreign acquisitions, thus their CEOs would expect to increase their compensation package through foreign acquisitions. However, our results show that there is no significant link between firm size and CEO compensation during the pre-acquisition period for firms involved in domestic acquisitions.

Keywords: CEO compensation, Domestic acquisitions, Foreign acquisitions

JEL Classification: G30, G34

Suggested Citation

Ozkan, Neslihan, Do CEOs Gain More in Foreign Acquisitions than Domestic Acquisitions? (December 5, 2011). Journal of Banking and Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1550106 or http://dx.doi.org/10.2139/ssrn.1550106

Neslihan Ozkan (Contact Author)

University of Bristol - School Accounting and Finance, U.K. ( email )

United Kingdom

HOME PAGE: http://https://research-information.bris.ac.uk/en/persons/neslihan-ozkan

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