| Summary: | 碩士 === 國立中央大學 === 人力資源管理研究所 === 104 === Top management compensation issue has long been concerned. Based on the previous studies, this study used Taiwan’s TWSE listed companies from 2010 to 2014 as research samples to verify the effect of managerial discretion affects the correlation between top management compensation and company’s operating performance. In addition, we derived executive manager's market pay through estimation in order to see the impact of overpay and underpay on company’s performance.
This study suggests that a quadratic relation is obtained between performance and top management compensation. This relation explains a positive effect that driving from top management compensation incentives supported by agency theory on performance at low levels of management compensation, and a negative effect which is consequence of higher managers’ discretion at high levels. Furthermore, when managers’ get overpaid, it indeed has positive effect on company’s future performance. As to the effect of underpay to the company’s future performance, contrast to our hypothesis, although the statistical results are not significant, analyzing the results from the data reveals that underpay also has positive effect on company’s future performance. For this reason, we provides some explanations.
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