Do architects of M&A make a killing regardless of the result?

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According to a new study in the Journal of Finance they do, from DealBook:

The study’s authors conclude, C.E.O.’s have a personal economic incentive to go ahead with a questionable merger — because even if it is a loser, they will probably still win. Two researchers, Jarrad Harford of the University of Washington Business School in Seattle and Kai Li from the Sauder School of Business at the University of British Columbia, crunched the numbers on 370 mergers of publicly traded United States companies announced from 1993 to 2000.

In fact, CEOs of companies that underperformed for a year after an acquisition were 43% richer than before. The inflow of new stock and option grants after a major deal is what makes this all possible, and it helps that grants are almost never rescinded if a deal turns sour. Naturally, boards that were more independent from management were more likely to penalize CEOs who orchestrated bad deals.
C.E.O.’s and Mergers: Nothing to Lose? [DealBook]

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