| Summary: | 碩士 === 國立臺灣大學 === 財務金融學研究所 === 100 === This essay establishes a theoretical model to investigate how the fairness issue and the employees’ outside opportunities affect firms’ spinoff decisions. Since different divisions may have different incentive problems and the compensation contract is used to deal with these problems, the compensation packages in different divisions may look unfair. That is, the compensation received by employees in divisions contributing high current earnings to the firm may seem low when it is compared to that of employees in divisions with bright future. This fairness issue will worsen the employees’ incentive problems. Moreover, this problem becomes more serious if employees in different divisions have different outside opportunities. This essay shows that the fairness issue and the employees’ outside opportunities are important factors behind the firms’ spinoff decisions. When the divergence of productivity prospect of different divisions is large, the fairness issue is more serious, and the probability of spinoffs increases.
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