Our study examines whether CEO compensation decreases in response to the reduction in firm size after a corporate spinoff. We find overall that CEO pay decreases subsequent to the spinoff, consistent with efficiency theory. However, the decrease is driven by the pay adjustment ac- companying CEO turnover around the spinoff. New CEOs hired around the spinoff have little bargaining power in regards to their compensation and thus we observe a decline in CEO compensation around these spinoff events. The compensation of those CEOs which span the spinoff event does not decrease, consistent with the notion of CEO entrenchment.
|Commitee:||Jagannathan, Murali, Ross, Jonathan|
|School:||State University of New York at Binghamton|
|School Location:||United States -- New York|
|Source:||DAI-A 79/10(E), Dissertation Abstracts International|
|Keywords:||Bargaining power, CEO, Turnover|
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