TY  - JOUR
AU  - Bargeron,Leonce L.
AU  - Schlingemann,Frederik P.
AU  - Stulz,René M.
AU  - Zutter,Chad J.
TI  - Do Target CEOs Sell Out Their Shareholders to Keep Their Job in a Merger?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14724
PY  - 2009
Y2  - February 2009
UR  - http://www.nber.org/papers/w14724
L1  - http://www.nber.org/papers/w14724.pdf
N1  - Author contact info:
Leonce Bargeron
Katz Graduate School of Business
University of Pittsburgh
372 Mervis Hall
Pittsburgh, PA 15260
E-Mail: llbargeron@katz.pitt.edu

Frederik P. Schlingemann
Katz Graduate School of Business
University of Pittsburgh
372 Mervis Hall
Pittsburgh, PA 15260
E-Mail: schlinge@katz.pitt.edu

Rene M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu

Chad Zutter
Katz Graduate School of Business
University of Pittsburgh
372 Mervis Hall
Pittsburgh, PA 15260
E-Mail: czutter@pitt.edu
AB  - CEOs have a potential conflict of interest when their company is acquired: they can bargain to be retained by the acquirer and for private benefits rather than for a higher premium to be paid to the shareholders. We investigate the determinants of target CEO retention by the acquirer and whether target CEO retention affects the premium paid by the acquirer. The probability that a CEO is retained increases with a private bidder, the performance of the target, and with the fraction of target shares held by insiders. Regardless of the bidder type, we find no evidence that the premium paid is lower when the CEO is retained by the acquirer. Strikingly, the target stock price increases more at the announcement of an acquisition by a private firm when the CEO is retained than when she is not. This result holds whether the private acquirer is a private equity firm or an operating company and for management buyouts.
ER  -