A Study on Potential Fat Cat Problem Related to a Raise in Directors’ Remuneration of Loss Firms

• Main Authors: ZHANG,QING-QUAN, 張慶全
• Other Authors: WU,SHING-JEN
• Format: Others
• Language: zh-TW
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/a2h2hw

碩士 === 東吳大學 === 會計學系 === 107 === 　　Since 2006, Taiwan Stock Exchange (TWSE) began posting the list of loss firms with higher directors’ and supervisors’ remuneration than theirs in the previous year on Market Observation Post System (MOPS) annually, and in this study, we call the list as “Potential Fat Cat List.” Even though this policy has been set for several years, there are a lot of firms offending the regulation. Using a sample of Taiwanese TSE and OTC companies during 2006 to 2016, we first examine the determinants of being included in the Potential Fat Cat List. The empirical results show that the institutional ownership could decrease the possibility of being included in the Potential Fat Cat List. In contrast, debt ratio is positively associated with the above possibility. Based on the perspective of excess director compensation, we further compare the current listing firms and suspect firms which were listed in the previous year, and having a positive earnings surprise in current year but paying higher directors’ and supervisors’ remuneration than previous period. The results indicate that current Fat Cat-listing firms’ selfishness level is more serious than loss firms’. We also find that suspect firms’ selfishness level is more serious than all loss firms’ (whether they are listed as Fat Cat companies or not); in the meanwhile, suspect firms have a tendency using discretionary accruals to manage earning as well as avoid being listed again.