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Success determinants of mergers and acquisitions : percent change in target manager compensation as a predictor of merger success

by Thomas, Trevor Adam

Abstract

Despite the vast body of research surrounding mergers and acquisitions, there is little consensus as to what contributes to merger success or failure. One variable, target manager retention, has been found to have some explanatory power, but target managers experience a turnover rate significantly higher than average. Decreasing target manager turnover may be a key to improving the low merger success rate, and one possible method would be to provide incentives in the form of compensation increases. This study seeks to test the hypothesis that percent change in target manager compensation is positively and significantly correlated with the merger success rate. The statistical model used to test this hypothesis is logistic regression, and data were collected on multiple mergers, executive compensation, historical stock prices, historical S&P 500 Index prices, and several business return ratios to determine whether a merger succeeded. The findings are inconclusive but provide interesting insights into the nature of mergers and illuminate several areas of potential future research.

Note

The author has given permission for this work to be deposited in the Digital Archive of Colorado College.

Colorado College Honor Code upheld.

Includes bibliographical references.

Administrative Notes

The author has given permission for this work to be deposited in the Digital Archive of Colorado College.

Colorado College Honor Code upheld.

Copyright
Copyright restrictions apply.
Publisher
Colorado College
PID
coccc:10548
Digital Origin
born digital
Extent
47 pages : illustrations
Thesis
Senior Thesis -- Colorado College
Thesis Advisor
Laux, Judith
Department/Program
Department of Economics and Business
Degree Name
bachelor
Degree Type
B.A.
Degree Grantor
Colorado College
Date Issued
2014-12