Do managerial incentives prevent value-destroying acquisitions?
Master thesis
Permanent lenke
http://hdl.handle.net/11250/2621222Utgivelsesdato
2019Metadata
Vis full innførselSamlinger
- Master of Science [1684]
Sammendrag
This paper examines how managerial incentives affect certain deal characteristics in
acquisitions and how these characteristics are related to announcement returns and shareholder
wealth. Based on our own results and extensive research, we identify large and diversifying
acquisitions to be value-destroying. Our findings suggest that performance-based
compensation, e.g. bonus and stock options, incentivizes the manager to acquire firms that
maximize shareholder wealth. Furthermore, we present empirical evidence that CEO duality
reduce the probability of engaging in diversifying, value-destroying acquisitions. These
findings suggest that managerial incentives significantly affect shareholder wealth in context
of acquisitions, where performance-based compensation and CEO duality prevent valuedestroying
acquisitions to some extent.
Beskrivelse
Masteroppgave(MSc) in Master of Science in Business, Finance - Handelshøyskolen BI, 2019