An Empirical Examination of the Role of the Compensation Committee in Firm Performance

• Main Authors: Huang Chun-Te, 黃峻德
• Other Authors: Li HE-Lung
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/8yvhr2

碩士 === 國立高雄應用科技大學 === 會計系碩士在職專班 === 102 === This study explores whether board and executive compensation became effectively linkedto firm performance after the Taiwanese authorities announced legislation requiring all publicly traded companies to establish a compensation committee by December 31, 2011, when independent directors were not yet popular in Taiwan. The studyfirst comparedthe fiscal year 2012 performance of 52 publicly traded companies that hadset up a compensation committee before June 30, 2011, with the performance of 52 similarly sized companies without such a committee. Then the study examined how firm performance varied between all publicly traded companies (not including the 52 companies that hadset up a compensation committee before June 30, 2011) during the 2010-2012 fiscal period. The empirical findings show that: (1) as expected, the 52 publicly traded companies with a compensation committee in place before June 30, 2011 performed better in 2012, although not statistically significant, compared to the 52 similarly sized companies without such a committee; (2) the Taiwanese publicly traded companies’ ROA and ROE (i.e. two accounting indicators of firm performance) values for 2012 were negatively correlated with both the 2010 and 2011 values, but positively correlated with the Tobin’s Q ratio, a market performance measure, for the same period of time. Apparently, those companies’ market values exceeded their operational performance in 2012.