The effect of severance pay on management behavior during a takeover battle is generally ambiguous. Yet, the severance payment completely restraining all influence activities always constitutes a "golden handshake." The manager leaving office still benefits from the increase in the merged firm's...

This paper provides highly significant evidence that golden parachutes spur innovation in concentrated-ownership corporations and State-Owned-Enterprises (SOEs). Taking advantage of China's institutional features, we find that golden parachutes lead to higher levels of innovation quantity and...