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The Impact Of Executive Compensation On The Post-Merger Integration Of U.S. And German Firms

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  • Anja Tuschke

Abstract

Based on research in management compensation and on the theory of international diversification, this paper analyzes the impact of executive compensation on the success of mergers and acquisitions (M&A) between U.S. and German firms. The results show that differences in the level and structure of U.S. and German executive compensation packages impair incentives, monitoring efforts, and management’s willingness to innovate. Cooperation across national boundaries, a collective goal orientation, and the accumulation of social capital are hindered. Depending on the type of diversification, the joint firm faces a trade-off between the realization of synergies in related businesses and increasing conflicts among managers with distinct compensation packages.

Suggested Citation

  • Anja Tuschke, 2003. "The Impact Of Executive Compensation On The Post-Merger Integration Of U.S. And German Firms," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 55(1), pages 60-78, January.
    • Handle: RePEc:sbr:abstra:v:55:y:2003:i:1:p:60-78
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    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • G3 - Financial Economics - - Corporate Finance and Governance
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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