The role of managerial incentives in bank acquisitions |
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| Affiliation: | 1. University of L''Aquila, Department of Industrial and Information Engineering and Economics, Via Gronchi 18, 67100 L''Aquila, Italy;2. Polytechnic University of Milan, Department of Management, Economics and Industrial Engineering, Via Lambruschini 4/b, 20156 Milan, Italy;1. School of Business, University of Kansas, Lawrence, KS 66045, United States;2. College of Business & Economics, Towson University, Towson, MD 21252, United States;3. College of Business, Stony Brook University, Stony Brook, NY 11794, United States;1. Kent State University, P.O. Box 5190, Kent, OH 44242, United States;2. The University of Illinois at Chicago, 601 S. Morgan St., Chicago, IL 60607, United States |
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| Abstract: | This paper examines the effect of variables related to management incentives, corporate governance, and performance on the likelihood a bank is acquired. We find that banks with higher levels of management ownership are less likely to be acquired, particularly in acquisitions where target managers depart from their jobs following the acquisition. We document high rates of management turnover following bank acquisitions. This evidence is consistent with an entrenchment hypothesis, where management teams block attempts to be acquired. We find little evidence that any other incentive, governance, or performance variables are systematically related to the probability a bank is acquired. |
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