Abstract
Exploiting regulatory changes in China that govern the use of stock options, we
investigate whether executive compensation affects acquisition decisions and post-acquisition performance from 2005 to 2014. We find that acquisitions are not driven by stock options. Managerial stock ownership promotes acquisitions at low levels of ownership – but leads to less frequent acquisitions at higher levels, implying a non-linear relationship. Similarly, we also find a non-linear impact of managerial stock ownership on long-term post-acquisition performance. However, neither stock options nor stock ownership determine short-term post-acquisition performance. Finally, state ownership has a significant impact on the compensation-acquisition relationship in that the above relationships only exist in private
enterprises.
investigate whether executive compensation affects acquisition decisions and post-acquisition performance from 2005 to 2014. We find that acquisitions are not driven by stock options. Managerial stock ownership promotes acquisitions at low levels of ownership – but leads to less frequent acquisitions at higher levels, implying a non-linear relationship. Similarly, we also find a non-linear impact of managerial stock ownership on long-term post-acquisition performance. However, neither stock options nor stock ownership determine short-term post-acquisition performance. Finally, state ownership has a significant impact on the compensation-acquisition relationship in that the above relationships only exist in private
enterprises.
| Original language | English |
|---|---|
| Pages (from-to) | 731-748 |
| Number of pages | 18 |
| Journal | Asia Pacific Business Review |
| Volume | 27 |
| Issue number | 5 |
| Early online date | 28 Oct 2020 |
| DOIs | |
| Publication status | Published - 2021 |
Keywords
- Acquisition
- state-owned enterprises
- stock option
- stock ownership