Ownership structure and golden parachutes: Evidence of credible commitment or incentive alignment?

Using a sample of S & P 500 firms, we find that golden parachutes are associated with concentrated external ownership, less concentrated internal ownership, and non-Delaware incorporation. We find little support that concentrated external owners use golden parachutes as credible commitment devic...

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Bibliographic Details
Published in:Journal of economics and finance 2007-10, Vol.31 (3), p.368-382
Main Authors: Small, Kenneth, Smith, Jeff, Yildirim, H. Semih
Format: Article
Language:English
Subjects:
Abnormal returns
Agreements
Business ownership
Compensation
Golden parachutes
Hypotheses
Multivariate analysis
Stockholders
Tying arrangements
Wages & salaries
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Summary:Using a sample of S & P 500 firms, we find that golden parachutes are associated with concentrated external ownership, less concentrated internal ownership, and non-Delaware incorporation. We find little support that concentrated external owners use golden parachutes as credible commitment devices. The general multivariate results support the incentive alignment hypothesis, and reaffirm the view that golden parachutes are a mechanism used to align managerial and shareholder interests when there is a separation between ownership and control. [PUBLICATION ABSTRACT]
ISSN:1055-0925
1938-9744
DOI:10.1007/BF02885726