| Summary: | 碩士 === 中國文化大學 === 會計學系 === 103 === This study aims to examine the impact of various combinations of board and CEO compensation on subsequent firm performance. To fulfil this purpose, I partition my sample firms into four groups, firms overpaying both directors and CEOs, underpaying both directors and CEOs, overpaying directors but underpaying CEOs, and underpaying directors but overpaying CEOs. The results show that firms paying incentive compensation to both directors and CEOs or overpaying directors but un-derpaying CEOs have higher market return and return on assets in the subsequent years compared to firms underpaying both directors and CEOs. Such results indicate that incentive compensation serves as a force driving top management to work harder. However, this study also shows that firms offering extra fixed pay to both directors and COEs or overpaying directors but underpaying CEOs have lower subsequent performance than firms underpaying both directors and CEOs. Such findings indicate that awarding extra fixed compensation cannot help promote performance, which may lead to fat-cat problems.
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