Corporate spinoffs and executive compensation

Frontiers of Business Research in China

Table 4 Pay-performance elasticity panel regressions

	Dependent Variable: The Log Difference in		Dependent Variable: The Log Difference in
	Salary and Bonus	Total Compensation	Salary and Bonus	Total Compensation
Panel A - Pay Performance Elasticity Regressions			Panel B - Panel Pay-Performance Elasticity Regressions with Long Run Post Spinoff Sample
Intercept (b1)	−0.03	0.64***	−0.04	0.64***
Intercept (b1)	(−0.58)	(4.7)	(−0.59)	(4.8)
Rtn _t (b2)	0.07	−0.17	0.08	−0.17
Rtn _t (b2)	(0.63)	(−0.68)	(0.64)	(−0.69)
Rtn _t-1 (b3)	0.19	−0.12	0.19	−0.13
Rtn _t-1 (b3)	(1.54)	(−0.44)	(1.56)	(−0.44)
SpD (b4)	0.05	−0.2	0.05	−0.06
SpD (b4)	(0.47)	(−1.3)	(0.66)	(−0.45)
SpD x Rtn _t (b5)	−0.07	0.55*	0.03	0.47*
SpD x Rtn _t (b5)	(−0.44)	(1.68)	(0.22)	(1.67)
SpD x Rtn _t-1 (b6)	−0.05	0.85**	−0.12	0.62*
SpD x Rtn _t-1 (b6)	(−0.31)	(1.97)	(−0.94)	(1.87)
N	139	137	274	271
R ²	0.03	0.13	0.02	0.09

This table reports results on the panel pay-performance elasticity regression for the pre- and post-spinoff parent. Panel A shows the panel regression results combines one pre-spinoff year (Year − 1) sample and one post-spinoff year (Year + 1) sample. Panel B shows the panel regression estimation combines the same pre-spinoff sample with three post-spinoff years (Year + 1 to Year + 3) sample. Parents firms’ sample is taken for both pre- and post-spinoff period. Both the log difference in salary and bonus and total CEO compensation are used as proxy for the dependent variable as indicated in the table. SpD is an indicator variable which takes a value of 0 before spinoff and 1 otherwise. All other variables are previously defined in Table 3. In both panels, 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