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Politically‐Connected Boards and the Structure of Chief Executive Officer Compensation Packages in Taiwanese Firms *
Author(s) -
Yu HsinYi
Publication year - 2010
Publication title -
asia‐pacific journal of financial studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.375
H-Index - 15
eISSN - 2041-6156
pISSN - 2041-9945
DOI - 10.1111/j.2041-6156.2010.01023.x
Subject(s) - chief executive officer , executive compensation , equity (law) , shareholder , accounting , officer , business , compensation (psychology) , politics , intervention (counseling) , corporate governance , scope (computer science) , sample (material) , corporate title , finance , management , economics , political science , law , psychology , chemistry , chromatography , psychiatry , computer science , psychoanalysis , programming language
This paper examines the relationship between the level of political connection of the board and chief executive officer (CEO) equity‐based compensation. Using a sample of Taiwanese firms, the paper provides evidence that politically connected boards grant a lower proportion of equity‐based compensation to CEOs. Political intervention can reduce the proportion of equity‐based compensation and, thereby, can have negative consequences for the alignment between the interests of CEOs and shareholders in firms. The findings obtained in this paper could be useful to policy‐makers in emerging economies, where there is wide scope for political intervention.