This thesis investigates how CEO risk taking incentives related to compensation in the form of executive stock options affect the decision to engage in merger and acquisition (M&A) activities with particular attention to same-industry versus cross-industry acquisitions. Risk taking incentives increase the propensity of M&As, especially for same-industry M&As. Furthermore, risk taking incentives increase the likelihood of cash payment for both same and cross-industry acquisitions. We do not find a significant direct stock price response difference between same-industry and cross-industry acquiring firms. The market responds favorably when risk taking incentives are higher for both same-industry acquisitions and cross-industry takeovers. We further find that the acquiring firm’s post-acquisition cash flow volatility is also positively related to risk taking incentives for both same- and cross-industry M&As.
| Identifer | oai:union.ndltd.org:USASK/oai:ecommons.usask.ca:10388/ETD-2015-07-2132 |
| Date | 2015 July 1900 |
| Contributors | Yang, Fan, Wilson, Craig |
| Source Sets | University of Saskatchewan Library |
| Language | English |
| Detected Language | English |
| Type | text, thesis |
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