The Effect of Equity based compensation To Target Firm Shareholders: An analysis in context of mergers
Dass, Disha (2010) The Effect of Equity based compensation To Target Firm Shareholders: An analysis in context of mergers. [Dissertation (University of Nottingham only)] (Unpublished)
How much employee stock options and restricted stock should be granted to employee of target firms? Will providing more stock options and restricted stock give target firm executives to sell their firms and cash out their accelerated earnings or will providing more options ensure that their incentives remain aligned with shareholder. Therefore mergers will lead to shareholder wealth maximisation. In this dissertation I examine if the accelerated of restricted vesting of restricted stock and stock options upon merger motivates the managers to sell their firms if this is the case then returns to shareholders should be negative. We find that providing of more equity based compensation does not effect on target firm managers decisions to sell. In fact, we find that accelerated equity based compensation has no effect on shareholders wealth.
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