Do Golden Parachutes Increase Shareholders' Wealth in the M&A between ICT Companies?

In this paper, using game model, we show that the network effects from M&A in ICT sector can generate abnormal returns in the market. It is also shown how the anti-takeover behaviors of target managers with golden parachutes can increase the shareholder wealth as well as the size of network effects. This is because the bidding strategies of acquiring firms depend on the target managers' defensive strategies. Therefore, using golden parachutes, shareholders can increase the bidding prices and defeat the acquiring firm's takeover attempt which generates lower network effects. The result shows that the probability of a successful takeover increases with GP. This paper also shows why most of the benefits of a successful takeover go to the target firm