| Â |
Year − 1
| Â |
Year + 1
| Â |
Year + 3
|
|---|
Panel A – Dependent Variable: Log Difference in Salary and Bonus |
Intercept (b1)
| − 0.038 |  | 0.007 |  | − 0.015 |
(−0.58) |  | (0.11) |  | (−0.31) |
Rtn
t
(b2)
| 0.079 | Â | 0.007 | Â | 0.270*** |
(0.64) | Â | (0.07) | Â | (4.12) |
Rtn
t-1
(b3)
| 0.19 | Â | 0.142 | Â | 0.135 |
(1.55) | Â | (1.55) | Â | (1.12) |
N
| 66 | Â | 73 | Â | 65 |
R
2
| 0.03 | Â | 0.022 | Â | 0.16 |
Panel B – Dependent Variable: Log Difference in Total CEO Compensation |
Intercept (b1)
| 0.641*** | Â | 0.44*** | Â | 0.63*** |
(4.71) | Â | (3.88) | Â | (6.76) |
Rtn
t
(b2)
| −0.173 |  | 0.38** |  | 0.28** |
(−0.68) |  | (1.98) |  | (2.09) |
Rtn
t-1
(b3)
| −0.127 |  | 0.72** |  | 0.64** |
(−0.44) |  | (2.23) |  | (2.47) |
N
| 65 | Â | 72 | Â | 64 |
R
2
| 0.01 | Â | 0.186 | Â | 0.122 |
- This table reports results on the yearly pay-performance elasticity regressions for the parent firms before and after spinoff using stock returns as a proxy for shareholders’ wealth. The Year represents the event year to the spinoff event (Year 0). Panels A and B show the pay-performance elasticity regressions using the log difference in Salary and Bonus and Total CEO Compensation to proxy for CEOs’ wealth. Total CEO Compensation is measured by the cash compensation (i.e., salary and bonus, and other compensation), with stock options and restricted stocks grants for the year. Stock return is the annual stock return for the firm’s fiscal year and is computed by compounding the monthly returns obtained from the CRSP database. Rtnt is the variable for contemporaneous returns and Rtnt-1 is the variable for lagged return. The t-statistics, which are based on White standard errors robust to within firms’ cluster correlation, are reported in parenthesis. ***, ** and * denote significance at the 1%, 5%, and 10% level respectively. Variation in sample size is due to data availability
