Top management retention in cross-border acquisitions: the roles of financial incentives, acquirer's commitment and autonomy

Abstract

Using data from a sample of Cross-Border Acquisitions (CBAs) made by UK firms, the present paper investigates the determinants of top management retention in CBAs. Applying both the theory of relative standing and the financial incentive mechanism of retention, we find that post-acquisition autonomy of the acquired firm and the acquirer’s commitment to the acquired organisation significantly affect top management retention. By contrast, and contrary to conventional wisdom, when interacting with other variables financial incentives may have a negative effect on top management retention. The managerial implications of the findings and directions for future research are also discussed.

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