The Acquisition of Restructured Firms: An Illustration of Market Discipline?

James K. Seward, James P. Walsh

Research output: Contribution to journalArticlepeer-review

7 Scopus citations


We examine the relationship between chief executive officer (CEO) compensation and acquisition activity subsequent to corporate restructurings in a sample of 152 firms created by a voluntary corporate spin‐off. We also investigate the linkage between these relationships and the stock market reaction to the initial restructuring announcements. Surprisingly, CEO wealth in the form of stock and options is strongly related to friendly and hostile acquisition activity, respectively. Moreover, the stock market appears to anticipate this subsequent acquisition activity. These results ask us to rethink our understanding of the motivational properties of equity ownership and the stock market's reaction to voluntary corporate spin‐off announcements.

Original languageEnglish (US)
Pages (from-to)585-603
Number of pages19
JournalJournal of Economics & Management Strategy
Issue number4
StatePublished - Dec 1994
Externally publishedYes

ASJC Scopus subject areas

  • General Business, Management and Accounting
  • Economics and Econometrics
  • Strategy and Management
  • Management of Technology and Innovation


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