| Abstract: | This study sought to determine whether major increases in firm size, achieved through acquisitions, result in greater chief executive officer (CEO) compensation, given manager versus owner control. A second issue addressed is whether the type of firm—single industry or multiple industry—plays a role in the linkage between acquisition activity and additional compensation. Other variables included in the analysis were CEO tenure and profitability. Annual observations from 1979 through 1986 of 50 firms that had engaged in acquisition activity form the basis of the study. Findings reveal that acquisitions, after allowing 1 year for the full impact of the merger to be felt, led to significant increases in CEO compensation for both owner- and manager-controlled firms. Also, it was found that manager-controlled firms gave their CEOs further rewards for additional years on the job, regardless of performance, while owner-controlled firms were found to reward more on the basis of performance. |
