Bank Mergers , the Market for Bank CEOs , and Managerial Incentives *
نویسندگان
چکیده
Compensation of bank CEOs increases after mergers, suggesting that executives may engage in acquisitions to enjoy size-related personal benefits (Bliss and Rosen, 2001). Alternatively, bank mergers can be viewed as the efficient assignation of merged assets to the managerial team best suited to realize merger gains. Theories of executive compensation based on managerial productivity and optimal incentives suggest, therefore, that changes in CEO compensation are related to the potential gains from merger, not merely merger-related size increases. We examine mergers among billiondollar banks in the 1990s and find results consistent with managerial productivity. Specifically, we show empirically that CEO compensation changes following mergers are positively related to anticipated gains from merger measured at the announcement date. Other changes in the structure of compensation are also consistent with hypotheses based on managerial productivity and incentive restructuring. Journal of Economic Literature Classification Numbers: G21, G34.
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