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Governance structures and the compensation of powerful corporate leaders in financial firms during M&As
journal contribution
posted on 2023-06-10, 03:29 authored by Henry Agyei-Boapeah, Collins G Ntim, Samuel FosuSamuel FosuWe examine the impact of mergers and acquisitions (M&As) on the compensation of powerful corporate leaders [i.e., boards of directors, including Chief Executives Officers (CEOs), Chief Financial Officers (CFOs), and Board Chairs] of acquiring firms. Using one of the largest datasets on M&As, directors’ compensation, and governance to-date, consisting of a sample of UK financials (banks, insurance firms, private equity firms, and speciality finance firms) over a 13-year period, our results obtained by employing multivariate regression analyses show that acquisitions, on average, have a positive and significant impact on directors’ compensation. This effect applies to both powerful corporate executives (CEOs, CFOs, and all other executive directors) and other non-executive directors. However, the positive acquisition effect on top executive compensation is much higher in larger and more complex acquisitions. We also find that much of the acquisition-related pay raises is equity-based rather than cash-based. Finally, we find CEOs to be the top beneficiaries from acquisitions. We interpret our findings within a multi-theoretical framework that draws insights from agency, executive power, managerial talent, and tournament theories of top executive compensation.
History
Publication status
- Published
File Version
- Accepted version
Journal
Journal of International Accounting, Auditing and TaxationISSN
1061-9518Publisher
ElsevierVolume
37Page range
1-20Article number
a100285Department affiliated with
- Accounting and Finance Publications
Full text available
- Yes
Peer reviewed?
- Yes