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  • About
  • The Global ETD Search service is a free service for researchers to find electronic theses and dissertations. This service is provided by the Networked Digital Library of Theses and Dissertations.
    Our metadata is collected from universities around the world. If you manage a university/consortium/country archive and want to be added, details can be found on the NDLTD website.
1

CEO compensation and managerial decisions: evidence from acquisitions

Blazer, Eric L. 10 November 2005 (has links)
While there is a wide body of literature examining the relation between CEO compensation and firm performance, few studies have directly tested the proposition that a strong pay-performance link: leads to improved future performance. This paper tests the hypothesis that a strong pay-performance link: leads to better managerial decisions. Following Jensen and Murphy's (1990b) methodology, pay-performance sensitivities are estimated for the CEOs of 105 NYSE and AMEX firms. The relation between the estimated pay-performance sensitivities and subsequent acquisition performance is examined for a sample of 140 acquisitions over the period 1980-86. Acquisition performance is measured by cumulative abnormal announcement returns for the event windows: [0], (-1,+1], [- 5, + 1], [- 5, +40], and [- 20, +40]. After controlling for other variables that are related to acquisition performance, a significant positive relation is observed between measures of pay-performance sensitivity and subsequent acquisition performance. The results suggests that a strong pay performance link may better align CEO and shareholder interest, and lead to improved future CEO performance. In addition, evidence is presented that suggests that optimal compensation design should jointly consider both stock options and traditional forms of compensation. / Ph. D.

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