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| Author: | Hall, P. L. Anderson, D. C. |
| Title: | The effect of golden parachutes on shareholder wealth and takeover probabilities |
| Journal: | Journal of Business Finance and Accounting
1997 : APR, VOL. 24:3/4, p. 445-463 |
| Index terms: | MERGERS WEALTH SHAREHOLDERS COMPANIES BY PROFITABILITY |
| Language: | eng |
| Abstract: | This paper focuses on the impact of the adoption of golden parachute compensation plans on shareholder wealth. The adoption of a golden parachute contract does not increase the probability of a firm receiving a takeover bid. Negative market reaction is probable to a firm's adoption of a golden parachute contract because stockholders perceive it to be a preventive measure and signal that additional antitakeover measures will follow. There is a positive relationship between the size of the golden parachute relative to the firm's market value and market reaction of many of the firms is indicative of an incentive alignment perception of stockholders. |
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