Decision-Making in Acquisitions: The Effect of Outside Directors' Compensation on Acquisition Patterns
Journal
Journal of Management
ISSN
0149-2063
ISSN-Digital
1557-1211
Type
journal article
Date Issued
2007-02-01
Author(s)
Abstract
This article examines how the compensation paid for outside directors affects firms' acquisition behavior. Using panel data of Standard & Poor's 1500 firms between 1996 and 2002, the authors find that stock and stock option pay for outside directors are related in an inverted U-shaped manner to a firm's acquisition rate and that for stock options, this relationship is moderated by board composition. Their findings suggest a dual agency model of corporate governance, according to which not only executives' incentives but also outside directors' incentives should be aligned with the shareholder value creation.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Sage Publ.
Publisher place
Thousand Oaks, Calif.
Volume
33
Number
1
Start page
30
End page
56
Pages
27
Subject(s)
Division(s)
Eprints ID
219939