The Impact of Director Compensation on Related Party Transactions: The Moderating Effect of Directors’ and Officers’ Liability Insurance

• Main Authors: CHEN, Ching-Fong, 陳鏡峰
• Other Authors: Lu, Cheng-Shou
• Format: Others
• Language: zh-TW
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/nm99rb

碩士 === 國立高雄科技大學 === 財富與稅務管理系 === 107 === This thesis aims to examine whether directors’ compensation and monitoring mechanism are associated with related party transactions (RPT). This paper focuses both on directors’ compensation and on their equity-based compensation, and also examines the moderating effect of directors’ and officers’ liability insurance (D&O insurance) between director compensation and RPT. Using a sample of listed non-financial Taiwanese companies from 2008 to 2017, this paper finds out that directors’ compensation is negatively associated with RPT, while equity-based compensation is positively associated with RPT. Next, we find that the board of director and institutional investors are positively associated with RPT, whereas the board independence is negatively associated with RPT. On the other hand, there is a positive moderating effect of D&O insurance on the relationship between director compensation and RPT. As a result, instead of alleviating agency problems, D&O insurance actually increases firms’ agency problems. Last, this paper divides the compensation measures into “market” level and “excessive” components. These findings suggest that overcompensating the directors’ compensation can alleviate agency problems.