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Accepted (AM)Open Access (License Unspecified), Open
Journal article
Stock option grants to target CEOs during private merger negotiations
Journal of financial economics, v 101(2), pp 413-430
01 Aug 2011
Abstract
Unscheduled stock options to target chief executive officers (CEOs) are a nontrivial phenomenon during private merger negotiations. In 920 acquisition bids during 1999-2007. over 13% of targets grant them. These options substitute for golden parachutes and compensate target CEOs for the benefits they forfeit because of the merger. Targets granting unscheduled options are more likely to be acquired but they earn lower premiums. Consequently, deal value drops by $62 for every dollar target CEOs receive from unscheduled options. Conversely, acquirers of targets offering these awards experience higher returns. Therefore, deals involving unscheduled grants exhibit a transfer of wealth from target shareholders to bidder shareholders. (C) 2011 Elsevier B.V. All rights reserved.
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Details
- Title
- Stock option grants to target CEOs during private merger negotiations
- Creators
- Eliezer M. Fich - Drexel UniversityJie Cai - Drexel UniversityAnh L. Tran - City, University of London
- Publication Details
- Journal of financial economics, v 101(2), pp 413-430
- Publisher
- Elsevier
- Number of pages
- 18
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000291625300008
- Scopus ID
- 2-s2.0-79957938786
- Other Identifier
- 991019169102904721
InCites Highlights
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance
- Economics