Corporate spinoffs and executive compensation

Justin Law () and Wayne Yu ()
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Justin Law: The Hong Kong Polytechnic University
Wayne Yu: City University of Hong Kong

Frontiers of Business Research in China, 2018, vol. 12, issue 1, 1-25

Abstract: Abstract 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.

Keywords: Spinoffs; Corporate governance; CEO compensation (search for similar items in EconPapers)
JEL-codes: G32 G34 J33 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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DOI: 10.1186/s11782-018-0043-9

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