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Golden Parachutes, Shark Repellents, and Hostile Tender Offers

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  • Knoeber, Charles R
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    Abstract

    A common view of golden parachutes and shark repellents is that they are designed by management to insulate itself from the discipline imposed by the market for corporate control and so are harmful to shareholders. This paper offers an alternative view that these devicesare beneficial to shareholders because they allow better contracting between manager and shareholders. Evidence on the incidence of goldenparachutes and on the compensation-tenure relationship for managers of golden parachute firms supports the alternative view. Copyright 1986 by American Economic Association.

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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 76 (1986)
    Issue (Month): 1 (March)
    Pages: 155-67

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    Handle: RePEc:aea:aecrev:v:76:y:1986:i:1:p:155-67

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    Cited by:
    1. Dino Falaschetti, 2004. "Can Voting Reduce Welfare? Evidence from the US Telecommunications Sector," Public Economics 0401006, EconWPA.
    2. Dino Falaschetti, 2004. "Can Voting Reduce Welfare? Evidence from the US Telecommunications Sector," Public Economics 0401009, EconWPA.
    3. Falaschetti, Dino, 2002. "Golden parachutes: credible commitments or evidence of shirking?," Journal of Corporate Finance, Elsevier, vol. 8(2), pages 159-178, March.
    4. Danielson, Morris G. & Karpoff, Jonathan M., 2006. "Do pills poison operating performance?," Journal of Corporate Finance, Elsevier, vol. 12(3), pages 536-559, June.
    5. Chongwoo Choe, 2006. "Optimal CEO Compensation: Some Equivalence Results," Journal of Labor Economics, University of Chicago Press, vol. 24(1), pages 171-201, January.
    6. Inderst, Roman, 2012. "Job Protection vs. Contracts At-Will: Trading-off Entrenchment and Shirking," MPRA Paper 53851, University Library of Munich, Germany.
    7. R├╝diger Fahlenbrach, 2009. "Shareholder Rights, Boards, and CEO Compensation," Review of Finance, European Finance Association, vol. 13(1), pages 81-113.
    8. Dirk Jenter & Katharina Lewellen, 2011. "CEO Preferences and Acquisitions," NBER Working Papers 17663, National Bureau of Economic Research, Inc.
    9. Hiroshi Osano, 2001. "Stock Options and Employees' Firm-Specific Human Capital under the Threat of Divesture and Aquisition," Working Papers 01-10, Ohio State University, Department of Economics.
    10. Evans, Jocelyn & Noe, Thomas H. & Thornton, John Jr., 1997. "Regulatory distortion of management compensation: The case of golden parachutes for bank managers," Journal of Banking & Finance, Elsevier, vol. 21(6), pages 825-848, June.
    11. Heitzman, Shane, 2011. "Equity grants to target CEOs during deal negotiations," Journal of Financial Economics, Elsevier, vol. 102(2), pages 251-271.
    12. Holden, Craig W. & Lundstrum, Leonard L., 2009. "Costly trade, managerial myopia, and long-term investment," Journal of Empirical Finance, Elsevier, vol. 16(1), pages 126-135, January.
    13. Lundstrum, Leonard L., 2002. "Corporate investment myopia: a horserace of the theories," Journal of Corporate Finance, Elsevier, vol. 8(4), pages 353-371, October.
    14. Sarig, Oded H. & Talmor, Eli, 1997. "In defense of defensive measures," Journal of Corporate Finance, Elsevier, vol. 3(3), pages 277-297, June.
    15. Rose, Morgan J., 2009. "Heterogeneous impacts of staggered boards by ownership concentration," Journal of Corporate Finance, Elsevier, vol. 15(1), pages 113-128, February.
    16. Boulton, Thomas J., 2010. "Venture capital and the incorporation decisions of IPO firms," Journal of Economics and Business, Elsevier, vol. 62(6), pages 477-501, November.
    17. Dino Falaschetti, 2003. "Voter Turnout, Regulatory Commitment, and Capital Accumulation: Evidence from the US Telecommunications Sector," Microeconomics 0311002, EconWPA.
    18. Sokolyk, Tatyana, 2011. "The effects of antitakeover provisions on acquisition targets," Journal of Corporate Finance, Elsevier, vol. 17(3), pages 612-627, June.
    19. Agrawal, Anup & Knoeber, Charles R., 1998. "Managerial compensation and the threat of takeover," Journal of Financial Economics, Elsevier, vol. 47(2), pages 219-239, February.

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