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Abstract
We find that CEO compensation increases following acquisitions only in those deals in which acquirer stock is used as the method of payment. These compensation increases are driven by increases in equity-based compensation and are concentrated in riskier acquirers, in riskier acquisitions, and in acquirers whose CEOs have low exposure to the stock price. We find little support for traditional agency cost explanations of changes in CEO pay following acquisitions. However, our findings are broadly consistent with compensation changes representing a contracting solution to a two-sided adverse selection problem that is present only in stock acquisitions.
Document Type
Article
Publication Date
2026
Digital Object Identifier (DOI)
https://doi.org/10.1017/S002210902510255X
Funding Information
We are grateful for the support of the Institute for the study of Free Enterprise.
Repository Citation
Bargeron, Leonce and Denis, David J., "CEO Compensation Changes Following Acquisitions" (2026). Finance and Quantitative Methods Faculty Publications. 1.
https://uknowledge.uky.edu/finance_facpub/1
Included in
Finance and Financial Management Commons, Management Sciences and Quantitative Methods Commons
Notes/Citation Information
© The Author(s), 2026. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington. This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.