CEO perquisite compensation and M&A performance

Chia-Ying Chan, Takeshi Nishikawa and Thomas C. Williams

The Quarterly Review of Economics and Finance, 2023, vol. 90, issue C, 162-177

Abstract: This paper offers empirical evidence of the role that CEO perquisite compensations (perks) play in a firm’s M&A activities. Using hand-collected panel-data on CEO perks from S&P 500 firms between 2006 and 2014, we find that the M&A deals undertaken by CEOs with high levels of perquisite receive significantly worse market reactions around the announcement period. Further, these deals experience lower post-acquisition abnormal operating and stock performance compared to the deals conducted by CEOs with low levels of perquisite. Firms whose CEOs received greater perquisite also exhibit severe crash risk. Our results are consistent with the widely held negative sentiment toward perquisite compensation.

Keywords: CEO perquisite; M&A; Corporate Governance; Agency Problem; Compensation (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:90:y:2023:i:c:p:162-177

DOI: 10.1016/j.qref.2023.05.008

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