IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Management takeover battles and the role of the golden handshake

  • Fabel, Oliver
  • Kolmar, Martin

The effect of severance pay on management behavior during a takeover battle is generally ambiguous. Yet, the severance payment completely restraining all influence activities always constitutes a golden handshake. The manager leaving office still benefits from the increase in the merged firm's total value. Moreover, given that the managers are compensated according to an identical linear incentive scheme, the optimal shareholder policy always entails a corner solution. Managers will either receive no severance pay, or the payment will be chosen such that their influence activities equal zero. Relatively strong incentive intensities and low synergy gains then imply that offering no severance pay dominates.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://econstor.eu/bitstream/10419/68871/1/685621715.pdf
Download Restriction: no

Paper provided by University of Konstanz, Department of Economics in its series Discussion Papers, Series I with number 319.

as
in new window

Length:
Date of creation: 2002
Date of revision:
Handle: RePEc:zbw:kondp1:319
Contact details of provider: Postal: D-78457 Konstanz
Phone: +49 7531 88 2314
Fax: +49-7531-88-2145
Web page: http://www.wiwi.uni-konstanz.de/

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Philippe Cornu & Dusan Isakov*, 2000. "The Deterring Role of the Medium of Payment in Takeover Contests: Theory and Evidence from the UK," European Financial Management, European Financial Management Association, vol. 6(4), pages 423-440.
  2. Herschel Grossman, 2000. "The Creation of Effective Property Rights," Working Papers 2000-15, Brown University, Department of Economics.
  3. Chowdhry, Bhagwan & Nanda, Vikram, 1993. " The Strategic Role of Debt in Takeover Contests," Journal of Finance, American Finance Association, vol. 48(2), pages 731-45, June.
  4. Chakraborty, Atreya & Arnott, Richard, 2001. "Takeover Defenses and Dilution: A Welfare Analysis," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 36(03), pages 311-334, September.
  5. Denis, David J. & Serrano, Jan M., 1996. "Active investors and management turnover following unsuccessful control contests," Journal of Financial Economics, Elsevier, vol. 40(2), pages 239-266, February.
  6. Yermack, David, 1995. "Do corporations award CEO stock options effectively?," Journal of Financial Economics, Elsevier, vol. 39(2-3), pages 237-269.
  7. Rajdeep Singh, 1995. "Takeover Bidding with Toeholds: The Case of the Owner's Curse," Finance 9503001, EconWPA.
  8. North, David S., 2001. "The role of managerial incentives in corporate acquisitions: the 1990s evidence," Journal of Corporate Finance, Elsevier, vol. 7(2), pages 125-149, June.
  9. Denis, David J, 1990. " Defensive Changes in Corporate Payout Policy: Share Repurchases and Special Dividends," Journal of Finance, American Finance Association, vol. 45(5), pages 1433-56, December.
  10. Jensen, M.C. & Murphy, K.J., 1988. "Performance Pay And Top Management Incentives," Papers 88-04, Rochester, Business - Managerial Economics Research Center.
  11. Choi, Yoon K., 2001. "Management turnover and executive compensation in synergistic takeovers," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(2), pages 223-238.
  12. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
  13. M. Mark Walker, 2000. "Corporate Takeovers, Strategic Objectives and Acquring Firm Shareholder Wealth," Financial Management, Financial Management Association, vol. 29(1), Spring.
  14. William N. Pugh & Sharon L. Oswald & John S. Jahera Jr., 2000. "The effect of ESOP adoptions on corporate performance: are there really performance changes?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(5), pages 167-180.
  15. Stulz, ReneM., 1988. "Managerial control of voting rights : Financing policies and the market for corporate control," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 25-54, January.
  16. Marcel Canoy & Yohanes E. Riyanto & Patrick Van Cayseele, 2000. "Corporate takeovers, bargaining and managers' incentives to invest," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(1), pages 1-18.
  17. Dann, Larry Y. & DeAngelo, Harry, 1988. "Corporate financial policy and corporate control : A study of defensive adjustments in asset and ownership structure," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 87-127, January.
  18. Peter Cramton & Alan Schwartz, 1991. "Using Auction Theory to Inform Takeover Regulation," Papers of Peter Cramton 91jleo, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
  19. Paul Bolster & Don Chance & Don Rich, 1996. "Executive Equity Swaps and Corporate Insider Holdings," Financial Management, Financial Management Association, vol. 25(2), Summer.
  20. Burkart, Mike, 1995. " Initial Shareholdings and Overbidding in Takeover Contests," Journal of Finance, American Finance Association, vol. 50(5), pages 1491-1515, December.
  21. Jack Hirshleifer, 1989. "Conflict and rent-seeking success functions: Ratio vs. difference models of relative success," Public Choice, Springer, vol. 63(2), pages 101-112, November.
  22. Denis, David J & Denis, Diane K, 1995. " Performance Changes Following Top Management Dismissals," Journal of Finance, American Finance Association, vol. 50(4), pages 1029-57, September.
  23. Uma V. Sridharan & Marc R. Reinganum, 1995. "Determinants of the Choice of the Hostile Takeover Mechanism: An Empirical Analysis of Tender Offers and Proxy Contests," Financial Management, Financial Management Association, vol. 24(1), Spring.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:zbw:kondp1:319. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.