Golden Parachutes, Board and Committee Composition, and Shareholder Wealth.
Takeover defense mechanisms have become common for many modern corporations. In this research, we examine one potential takeover defense mechanism, golden parachutes. In particular, the relationship between the board of directors (and the board committees) and the question of whether the parachutes are aligned with shareholder interests or are a means of entrenching management, is studied. Results show that the composition of the board of directors' compensation committee influences the market's perceived outcome of golden parachute adoption. When insiders and affiliated outsiders dominate the board's compensation committee, negative returns are more likely to occur than when independent outsiders control the committee. Copyright 1998 by MIT Press.
Year of publication: |
1998
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Authors: | Davidson III, Wallace N ; Pilger, Theodore ; Szakmary, Andrew |
Published in: |
The Financial Review. - Eastern Finance Association - EFA. - Vol. 33.1998, 4, p. 17-32
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Publisher: |
Eastern Finance Association - EFA |
Saved in:
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