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We analyze the effects of optimism and overconfidence when the manager's compensation package includes severance pay and the CEO has bargaining power. We find that optimism does not affect incentive pay but increases severance pay with a negative effect on profit. Overconfidence, on the...
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executives are more likely to receive explicit contracts and better terms. Firms with high distress risk, high takeover … post payouts to managers are largely determined by the ex ante contract terms …
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. This effect of CEO relative inside leverage on returns for shareholders in vertical acquisitions is more pronounced when …We provide evidence concerning the effect of managerial risk-taking incentives on merger and acquisition (M … (CEO) relative inside leverage to proxy for the incentives of risk-averse managers, we find that CEOs with higher inside …
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