Golden Parachutes

Golden Parachutes

By
David F. Larcker, Brian Tayan
CGRI Research Spotlight Series. Corporate Governance Research Initiative (CGRI),
2015

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.”