Tournament Incentives and Acquisition Performance

Iftekhar Hasan (), Marco Navone, Thomas To and Eliza Wu

Published Paper Series from Finance Discipline Group, UTS Business School, University of Technology, Sydney

Abstract: This paper examines the impact of promotion-based tournament incentives on corporate acquisition performance. Measuring tournament incentives as the compensation ratio between the CEO and other senior executives, we show that acquirers with greater tournament incentives experience lower announcement returns. Further analysis shows that the negative effect is driven by the risk-seeking behavior of senior executives induced by tournament incentives. Our results are robust to alternative identification strategies. Our evidence highlights that senior executives, in addition to the CEO, play an influential role in acquisition decisions.

JEL-codes: G30 G34 G41 J31 J33 J62 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2020-01-01
New Economics Papers: this item is included in nep-cfn and nep-hrm
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Citations: View citations in EconPapers (9)

Published in: Hasan, I., Navone, M. A., To, T. and Wu, E., 2020, "Tournament Incentives and Acquisition Performance", The Review of Corporate Finance Studies, 9(2), 384-419

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Journal Article: Tournament Incentives and Acquisition Performance (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:uts:ppaper:2020-3

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