Corporate spinoffs and executive compensation

This paper investigates the impact of corporate spinoffs on executive compensation. We find no significant association between executive compensation and stock returns prior to spinoffs, but a significant positive association between the two afterwards. We also find evidence that corporate governanc...

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Bibliographic Details
Published inFrontiers of business research in China Vol. 12; no. 4; pp. 399 - 423
Main Authors Law, Justin, Yu, Wayne
Format Journal Article
LanguageEnglish
Published Singapore Higher Education Press 01.12.2018
Springer Singapore
Springer Nature B.V
Subjects
Accounting/Auditing
Business and Management
Business Finance
CEO compensation
Corporate governance
Executive compensation
Human Resource Management
Marketing
Organization
Spinoffs
China
G34
J33
Corporate governance
Spinoffs
CEO compensation
G32
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Summary:This paper investigates the impact of corporate spinoffs on executive compensation. We find no significant association between executive compensation and stock returns prior to spinoffs, but a significant positive association between the two afterwards. We also find evidence that corporate governance generally improves after the spinoff. In addition, the positive association between executive compensation and stock returns is more pronounced for firms with greater improvements in their corporate governance. Overall, our findings support the notion that spinoffs create value by reducing agency costs.
Bibliography:Corporate governance
Spinoffs
CEO compensation
ISSN:1673-7326
1673-7431
DOI:10.1186/s11782-018-0043-9