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  • CEO inside debt and the acquisition of private targets

    Author(s)
    Bhabra, GS
    Bhabra, HS
    Hossain, AT
    Griffith University Author(s)
    Bhabra, Gurmeet Singh
    Year published
    2021
    Metadata
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    Abstract
    We find a strong positive association between the inside debt holdings (pension benefits and deferred compensation) of CEOs and announcement-period abnormal returns (CARs) of acquiring firms bidding for private targets. In addition, gains to acquirers with high inside debt persist for at least 3 years post-acquisition. Further analyses suggest that our results are largely driven by firms with lower levels of manager-shareholder agency conflicts as proxied by higher transparency in firm activities, presence of a less powerful CEO, or presence of stronger monitoring. Our results are robust to an array of sensitivity tests.We find a strong positive association between the inside debt holdings (pension benefits and deferred compensation) of CEOs and announcement-period abnormal returns (CARs) of acquiring firms bidding for private targets. In addition, gains to acquirers with high inside debt persist for at least 3 years post-acquisition. Further analyses suggest that our results are largely driven by firms with lower levels of manager-shareholder agency conflicts as proxied by higher transparency in firm activities, presence of a less powerful CEO, or presence of stronger monitoring. Our results are robust to an array of sensitivity tests.
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    Journal Title
    Accounting and Finance
    DOI
    https://doi.org/10.1111/acfi.12857
    Note
    This publication has been entered in Griffith Research Online as an advanced online version.
    Subject
    Applied economics
    Finance
    Publication URI
    http://hdl.handle.net/10072/408984
    Collection
    • Journal articles

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