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M&A Behaviour and CEO Compensation - A Swedish study with governance implications

Walle, Anders LU and Larsson Ernefelt, Gustaf (2012) BUSN89 20121
Department of Business Administration
Abstract
The authors are intending to investigate if theoretical arguments for misalignments from compensation structures go for Swedish firms. Attempting to bring research forward, the frameworks on M&A and compensation literature will be combined to investigate the interdependence between CEO compensation and M&A behaviour.

An empirical research is made utilizing a multiple panel regression study, adjusted for firm size effects. Clustered observations in the sample with the highest and lowest compensations provide a complementing explanation

The theoretical framework includes previous empirical studies of M&A performance and drivers of both M&As and CEO compensation, with its implication of the M&A behaviour. The empirical research consists... (More)
The authors are intending to investigate if theoretical arguments for misalignments from compensation structures go for Swedish firms. Attempting to bring research forward, the frameworks on M&A and compensation literature will be combined to investigate the interdependence between CEO compensation and M&A behaviour.

An empirical research is made utilizing a multiple panel regression study, adjusted for firm size effects. Clustered observations in the sample with the highest and lowest compensations provide a complementing explanation

The theoretical framework includes previous empirical studies of M&A performance and drivers of both M&As and CEO compensation, with its implication of the M&A behaviour. The empirical research consists of compensation and merger statistics of OMXS30 between 2000-2011

The authors find, with a strong significance, that CEOs with higher fixed compensation tend to make more and larger acquisitions than those with lower. The conclusions provide a further explanation of the rationale behind mergers in Swedish firms as impacted by something else than value creating. Although flawed compensation structures do not account for the whole explanation, the authors do argue for the findings proving the mere existence of inappropriate incentive systems and the lack of a governing effect in Swedish companies (Less)
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author
Walle, Anders LU and Larsson Ernefelt, Gustaf
supervisor
organization
course
BUSN89 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
CEO-compensation, M&A Behaviour, Firm size effect, Flawed incentive systems, Corporate governance
language
English
id
2856646
date added to LUP
2012-07-24 12:41:49
date last changed
2012-07-24 12:41:49
@misc{2856646,
  abstract     = {The authors are intending to investigate if theoretical arguments for misalignments from compensation structures go for Swedish firms. Attempting to bring research forward, the frameworks on M&A and compensation literature will be combined to investigate the interdependence between CEO compensation and M&A behaviour.

An empirical research is made utilizing a multiple panel regression study, adjusted for firm size effects. Clustered observations in the sample with the highest and lowest compensations provide a complementing explanation

The theoretical framework includes previous empirical studies of M&A performance and drivers of both M&As and CEO compensation, with its implication of the M&A behaviour. The empirical research consists of compensation and merger statistics of OMXS30 between 2000-2011

The authors find, with a strong significance, that CEOs with higher fixed compensation tend to make more and larger acquisitions than those with lower. The conclusions provide a further explanation of the rationale behind mergers in Swedish firms as impacted by something else than value creating. Although flawed compensation structures do not account for the whole explanation, the authors do argue for the findings proving the mere existence of inappropriate incentive systems and the lack of a governing effect in Swedish companies},
  author       = {Walle, Anders and Larsson Ernefelt, Gustaf},
  keyword      = {CEO-compensation,M&A Behaviour,Firm size effect,Flawed incentive systems,Corporate governance},
  language     = {eng},
  note         = {Student Paper},
  title        = {M&A Behaviour and CEO Compensation - A Swedish study with governance implications},
  year         = {2012},
}