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Frontiers of Business Research in China

ISSN 1673-7326

ISSN 1673-7431(Online)

CN 11-5746/F

Postal Subscription Code 80-977

Front. Bus. Res. China    2018, Vol. 12 Issue (4) : 399-423    https://doi.org/10.1186/s11782-018-0043-9
RESEARCH
Corporate spinoffs and executive compensation
Justin Law1(), Wayne Yu2
1. School of Accounting and Finance, The Hong Kong Polytechnic University, Hung Hom, Hong Kong, China
2. College of Business, City University of Hong Kong, Kowloon Tong, Hong Kong, China.
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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     
Issue Date: 17 January 2019
 Cite this article:   
Justin Law,Wayne Yu. Corporate spinoffs and executive compensation[J]. Front. Bus. Res. China, 2018, 12(4): 399-423.
 URL:  
https://academic.hep.com.cn/fbr/EN/10.1186/s11782-018-0043-9
https://academic.hep.com.cn/fbr/EN/Y2018/V12/I4/399
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