Merger and acquisition related determinants of executive compensation arrangements' adoption Online publication date: Wed, 26-Sep-2007
by Virginia Bodolica, Michel Magnan, Martin Spraggon
International Journal of Business Governance and Ethics (IJBGE), Vol. 3, No. 4, 2007
Abstract: Previous research has investigated the links between Mergers and Acquisitions (M&As) and the monetary magnitude of executive compensation, but failed to inquire how the adoption of specific attributes of compensation contacts relates to M&A activities. We address this gap in the literature by examining the impacts of some M&A characteristics and acquirers' features on the adoption of executive compensation protection provisions and new Long-Term Incentive Plans (LTIPs). The study adopts a longitudinal design before–after M&A deals for 80 Canadian acquiring companies that engaged in M&A activities between 1995 and 2001. Our findings suggest that both transactional and organisational characteristics significantly explain the executive compensation arrangements' adoption around M&A transactions, but that the adoption of new LTIPs is subjected to a different set of determinants than the adoption of compensation protection provisions. We interpret these results in the light of the agency, political and institutional perspectives.
Online publication date: Wed, 26-Sep-2007
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