Executives' equity compensation and its relationship to acquisition and divestitures内容摘要:
Executives’ equity compensation and its relationship to acquisition and divestitures Master thesis Lars Stein (355273ls) Supervisor: Prof.dr.E.A. de Groot 2 Table of Contents Introduction....................................................................................................................................3 Literature review.............................................................................................................................4 Size & compensation...................................................................................................................4 The link between executive compensation and firm performance.............................................5 Conceptual development................................................................................................................6 Alignment theory........................................................................................................................6 Differentiations and asymmetric risk...........................................................................................7 Equity compensation effects.......................................................................................................8 In which way options do the job.................................................................................................8 Acquisitions.................................................................................................................................9 Divestitures...............................................................................................................................10 The context of incentives..........................................................................................................11 CEO position tenure..............................................................................................................11 Firm performance.................................................................................................................12 Hubris....................................................................................................................................13 Methods........................................................................................................................................13 Sample and Data.......................................................................................................................13 Dependent variables.................................................................................................................14 Independent variables...............................................................................................................14 Control variables.......................................................................................................................15 Empirical Method......................................................................................................................16 Analysis & Results.........................................................................................................................16 Deficiencies & Discussion..............................................................................................................20 References.....................................................................................................................................21 Appendix.......................................................................................................................................24 Figures.......................................................................................................................................24 Tables........................................................................................................................................27 3 Executives’ equity compensation and its relationship to acquisitions and divestitures An exogenous study (Sanders, 2001) was pivotal to this thesis and thus was widely replicated. Particularly this underlying study analyzed how either CEO stock ownership or stock option pay affects CEOs risk propensity. In this case, the willingness to engage into acquisition or divestitures was used as a proxy for risk. Further contextual circumstances like position tenure and firm performance were expected to have moderating characteristics. This thesis tried to provide additional assurance towards the results