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This paper investigates the impact of corporate spinoffs on executive compensation.We find no significant association between executive compensation and stock rets prior to spinoffs,but a significant positive association between the two afterwards.We also find evidence that corporate govance generally improves after the spinoff.In addition,the positive association between executive compensation and stock rets is more pronounced for firms with greater improvements in their corporate govance.Overall,our findings support the notion that spinoffs create value by reducing agency costs.