EXECUTIVE COMPENSATION AND CREDIT RISK:THE PERSPECTIVES OF CORPORATE GOVERNANCE

• Main Authors: Hsin-Chieh Kuo, 郭欣潔
• Other Authors: Jin-Ying Wang
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/57171058160717468584

碩士 === 銘傳大學 === 風險管理與保險學系碩士班 === 99 === The objective of the research is to explain the associations between executive compensation and credit ratings from the perspectives of corporate governance. Ashbaugh-Skaife, Collins, and LaFond, (2006) find that CEOs of firms with speculative-gradeare overcompensated to a greater degree than their counterparts of firms with investment-grade. This research uses the data of executive compensation of Taiwan’s listed companies during 2005 to 2009 as responsive variable, and assigns the data as guaranteed salary which is invariable with the performance and performance-based pay which is variable with the performance. The board, ownership structure and separation of ownership and control represent corproate governance variables. Low credit-risk investment-grade or high credit-risk speculative-grade companiesare classified by the credit rating results. This research tests through regressions by using these data. The summery of salient findings are as following: 1. Well corporate governance receives lower credit risk. Poor corporate governance receives higher credit risk. 2. CEOs of firms with well corporate govermanceare paid with lower guaranteed salary and higher performance-based pay. CEOs of firms with poorare paid with higher guaranteed salary and lower performance-based pay. 3. CEOs of firms with speculative-grade and weak corporate governance are paid with higher compensation. 4. The outcome of univariate analyses shows CEOs of firms with investment-grade are paid with higher compensation than CEOs of firms with speculative-grade. Moreover, firms with speculative-grade use profits to pay CEOs compensation are obviously higher than firms with investment-grade. However, after testing through regressions by adding corproate governance and control variables, the research shows CEOs of firms with speculative-grade are paid with higher compensation than CEOs of firms with investment-grade. Therefore, our finding almost supports the result of the Ashbaugh-Skaife, Collins, LaFond, (2006).