Executive Pay-Performance Sensitivity and Corporate Monitoring Mechanism

• Main Authors: Pei-Chi Chen, 陳珮綺
• Other Authors: Keng-Yu Ho
• Format: Others
• Language: en_US
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/37072890861818537743

碩士 === 國立臺灣大學 === 財務金融學研究所 === 102 === Owing that there is an increasing number of studies integrating executive pay-performance sensitivity yet with few using samples from Taiwan, this dissertation employs a data set of Taiwan listed firms from 2007 to 2012 to examine the association between pay-performance sensitivity and monitoring mechanisms from shareholders and the board. The main contribution of this study is to further divide executive compensation into cash compensation and equity compensation and explore the impacts of the monitoring mechanisms on these two types of pay-performance sensitivities. The empirical results suggest that pay-to-performance is less sensitive when board size is large and when many executives are in the board. As for the shareholder monitoring mechanism, pay-performance sensitivities under total and cash compensation is increased when blockholders monitoring is added, while equity pay-performance sensitivity shows the opposite relation. These results implicate that under the circumstances of firms connecting executive compensation and firm performance to mitigate the gap between managers’ and shareholders’ interests, corporate monitoring mechanisms may perform add-on effects or serve as substitutes.