Enhancing Managerial Incentives and Value Creation

Download or read book Enhancing Managerial Incentives and Value Creation written by Unyong Pyo and published by . This book was released on 2006 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: I study changes in CEO compensation and pay-performance relations to examine how corporate spinoffs affect managerial incentive compensation and whether the changes in management compensation can explain the value enhancement and operating performance improvements that occur following spinoffs. Analyzing a sample of 124 non-taxable spinoffs during 1990-1997, I find that changes in managerial compensation are a significant motive for spinoffs. Changes in managerial incentives alone are consistent with the post-spinoff changes in operating performance, while changes in business focus are not. Spinoffs that are not accompanied by enhanced pay-performance relations do not improve operating performance even with increased business focus.