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Why Do Board Members Receive Excess Compensation?
Author(s) -
Ting HsiuI
Publication year - 2016
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2744
Subject(s) - compensation (psychology) , order (exchange) , human capital , business , sample (material) , accounting , executive compensation , economics , finance , psychology , market economy , social psychology , chemistry , chromatography
This paper examines compensation to the boards of directors and supervisors for a sample of 656 firms over the period 1999–2008. I find in Taiwan that about 53.21% of firms pay excess compensation to their boards and 13.72% of the boards are overpaid by more than 50%. This paper conjectures that firms reward directors and supervisors in order to retain their valuable human capital and notes a robust positive effect of excess compensation on future firm performance. Because directors and supervisors are rewarded for future success, their excess pay may not be considered all that bad. Copyright © 2015 John Wiley & Sons, Ltd.