Why Do Board Members Receive Excess Compensation?. (7th July 2015)

• Record Type: Journal Article
• Authors: Ting, Hsiu‐I
• Is Part Of: Managerial and decision economics. Volume 37:Number 8(2016)
• Page Start: 552
• Page End: 562
• Publication Date: 2015-07-07
• Subjects: Managerial economics -- Periodicals; Decision making -- Periodicals; Management -- Periodicals; 658.15
• DOI: 10.1002/mde.2744
• Languages: English
• ISSNs: 0143-6570

Abstract

Abstract : 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.