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  • acquisitionpremium_ECONOMICA

    Rights statement: This is the peer reviewed version of the following article: Homroy, S. (2015), Does Threat of Dismissal Constrain Acquisition Premium in CEO Pay?. Economica. doi: 10.1111/ecca.12163 which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/ecca.12163/abstract This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.

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Does threat of dismissal constrain acquisition premium in CEO pay

Research output: Contribution to journalJournal article

Published
<mark>Journal publication date</mark>12/2015
<mark>Journal</mark>Economica
Issue numberSuppl. 1
Volume82
Number of pages23
Pages (from-to)1349-1371
Publication statusPublished
Early online date18/09/15
Original languageEnglish

Abstract

This paper shows that the likelihood of post-acquisition CEO turnover can act as a constraint on risky acquisition decisions. The acquisition premium in pay decreases by over 50% if the dismissal risk is controlled for. Given a smaller pay premium for undertaking acquisitions and a non-zero risk of dismissal, shareholders are shown to be able to exercise some control over managerial incentives to engage in risky acquisitions through the mechanism for dismissal.

Bibliographic note

This is the peer reviewed version of the following article: Homroy, S. (2015), Does Threat of Dismissal Constrain Acquisition Premium in CEO Pay?. Economica. doi: 10.1111/ecca.12163 which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/ecca.12163/abstract This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.