George Alexandrou

Share Holder Wealth Effects of Corporate Selloffs: Impact of Growth Opportunities, Economic Cycle and Bargaining Power

Most of the existing empirical evidence on corporate selloffs documents significant wealth gains for the seller’s shareholders. We investigate the sources of these wealth gains by examining the impact of business and financial strategy, the economic environment during selloff, and the bargaining advantages of the seller including information asymmetry. We find evidence that sellers with growth opportunities and financially strong sellers enjoy higher returns. Selloffs during recessions generate larger wealth gains than those during economic boom. Information asymmetry due to the buyer’s location being different from the purchased division’s gives the seller a bargaining advantage leading to larger wealth gains. Relatively large divestments are more beneficial to seller shareholders than small ones. The study highlights the importance of both firm specific and environmental factors in explaining the wealth gains associated with corporate selloffs.

CEO Compensation and Relative Company Performance Evaluation UK Evidence

This study examines how firm performance influences CEO pay in U.K. public listed companies. Specifically, it explores evidence of relative performance evaluation, following the recommendation in the U.K. Combined Code on Corporate Governance to link executive pay to relative firm performance. Using a panel of CEOs drawn from 204 of the largest, nonfinancial U.K. companies, between 2003 and 2007, we provide new and convincing evidence that shows basic pay and annual bonus is determined relative to annual FTSE 350 market performance and long-term incentive payouts are determined relative to 3-year FTSE 350 industry sector performance. Our results provide robust evidence that is consistent with the principal-agent framework of executive pay and firm performance. We demonstrate that it is crucial for research to distinguish between the different elements of pay and the different performance conditions that attach to those elements in order to establish a comprehensive understanding of the pay-for-performance relationship. The study provides confirmation that remuneration committees consider own firm performance relative to peer group performance in setting up CEO compensation contracts. We conclude that changes introduced to improve corporate governance practice in the field of executive pay are working to the benefit of shareholders.

Mergers and Acquisitions in Maritime Industry

In a comprehensive study of all shipping mergers and acquisitions since 1984 we document that the shareholders of both acquirer and target realize average abnormal gains of 1.2% and 3.3% respectively and both parties gain more from diversifying than focus-increasing deals. We find that acquirers gain more when paying with stock, in cross-border deals and from public targets while larger acquirers destroy wealth. The results indicate that targets gain more from cross-border and focus-increasing deals. We study the impact of regulatory interventions on the marginal propensity to merge among shipping firms and find significant differences across regions.