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Do firm and state antitakeover provisions affect how well CEOs earn their pay?

  • Scott W. Barnhart

    (Florida Atlantic University, Boca Raton, FL, USA)

  • Michael F. Spivey

    (Clemson University, Clemson, SC, USA)

  • John C. Alexander

    (Clemson University, Clemson, SC, USA)

Registered author(s):

    The relationship between CEO pay-adjusted firm performance and firm-specific antitakeover amendments and state antitakeover laws is examined. The findings suggest that the potential entrenchment resulting from the reduced threat of external control provided by antitakeover provisions may allow the CEO to deliver a lower level of firm performance relative to their compensation. At first glance, the state antitakeover provisions appear to be insignificant in the presence of firm-specific amendments. However, further analysis reveals they can play an important role, in some cases reinforcing the effects of the firm-specific amendments. With respect to the firm-specific amendments, the negative relation is associated with the presence of blank check preferred stock and poison pill amendments. Copyright © 2000 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/mde.992
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    Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

    Volume (Year): 21 (2000)
    Issue (Month): 8 ()
    Pages: 315-328

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    Handle: RePEc:wly:mgtdec:v:21:y:2000:i:8:p:315-328
    Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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    1. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-64, April.
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    8. Brickley, James A. & Coles, Jeffrey L. & Terry, Rory L., 1994. "Outside directors and the adoption of poison pills," Journal of Financial Economics, Elsevier, vol. 35(3), pages 371-390, June.
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    10. Lippert, Robert L & Moore, William T, 1994. "Compensation Contracts of Chief Executive Officers: Determinants of Pay-Performance Sensitivity," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 17(3), pages 321-32, Fall.
    11. Alexander, John C. & Spivey, Michael F. & Wayne Marr, M., 1997. "Nonshareholder constituency statutes and shareholder wealth: A note," Journal of Banking & Finance, Elsevier, vol. 21(3), pages 417-432, March.
    12. Laurence Schumann, 1988. "State Regulation of Takeovers and Shareholder Wealth: The Case of New York's 1985 Takeover Statutes," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 557-567, Winter.
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