This Research Spotlight provides a summary of the academic literature on how golden parachute payments influence CEO incentives to pursue mergers and acquisitions. It reviews the evidence of:
- Shareholder reaction to the implementation of golden parachutes
- The relation between golden parachutes and the likelihood of an acquisition
- The relation between golden parachutes and takeover premiums
- The relation between golden parachutes and management entrenchment
- The relation between unscheduled stock option grants and golden parachutes
This Research Spotlight expands upon issues introduced in the Quick Guide “The Market for Corporate Control.”