Compensations of Top Executives and M&A Behaviors: An Empirical Study of Listed Companies

• Main Authors: Jiao Xue, Heng Fan, Zhanxun Dong
• Format: Article
• Language: English
• Published: MDPI AG 2020-10-01
• Series: International Journal of Financial Studies
• Subjects: mergers and acquisitions behaviors; executive compensation incentive; beneficial distribution mechanisms; listed companies
• Online Access: https://www.mdpi.com/2227-7072/8/4/64

This study empirically examines the relationship between executive compensation and mergers and acquisitions (M&A) behaviors by identifying the influence of short- and long-term incentive on the propensity and scale of M&A. When the short-term incentive is insufficient, M&A behaviors serve as a beneficial compensation mechanism. Thus, lack of executives’ incentive promotes the propensity to engage in M&A and significantly affects the scale of M&A. With regard to long-term incentives, M&A behaviors serve as a beneficial creation mechanism. Shareholding of executives promotes M&A propensity, and does not significantly affect the scale of M&A. This study significantly contributes to research in M&A behaviors by revealing the beneficial distribution mechanisms of M&A behaviors.