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Mergers and executive compensation changes: Evidence from African markets

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  • Amewu, Godfred
  • Alagidede, Paul

Abstract

This study examines the impact of mergers and acquisition deals on various executive pay schemes and factors that drive these pay rise in Africa from 2002 to 2016. We find that executives of African acquiring firms are rewarded significantly for carrying out successful M&A deals in the year of merger. Besides, pay rise is strongly impacted by the size of the deal across all various forms of executive pay. We also find that pay increases are high for executives who acquire private targets but no evidence was found to support the impact of domestic acquisitions. South African executives are rewarded more based on the market perception of the deal quality. Increase in compensation is not affected by industry classification, diversification and international operation, cross-listing and mode of payment, although there is evidence of the influence of equity mode of payment for the South African market. Further, we distinctively examine the impact of corporate governance factors on pay rise and observe that firms with larger outside board of directors’ representation negatively determine executive total pay and there is no evidence that CEO’s age and gender influence executive pay. However, the experience of the CEO has a very high positive influence on the level of compensation for only South African firms.

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  • Amewu, Godfred & Alagidede, Paul, 2019. "Mergers and executive compensation changes: Evidence from African markets," Research in International Business and Finance, Elsevier, vol. 48(C), pages 397-419.
    • Handle: RePEc:eee:riibaf:v:48:y:2019:i:c:p:397-419
    DOI: 10.1016/j.ribaf.2019.01.010
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    2. Bi, XiaoGang & Tang, Judy & Tharyan, Rajesh, 2020. "Switching due diligence auditor in Chinese mergers and acquisitions," Research in International Business and Finance, Elsevier, vol. 54(C).

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    More about this item

    Keywords

    Acquirers; Africa; Executive compensation; Pay growth; M&A;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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