Impact of the Compensation and Ownership Stake of Directors on the Operating Performance of Financial Services Firms in Taiwan
Date Issued
2009
Date
2009
Author(s)
Chen, Jen-Hsun
Abstract
This thesis examines two research issues. First is whether increasing the compensation and ownership stake of directors of financial services firms in Taiwan helps a firm''s operating performance. The second is whether the impact of director compensation on operating performance is affected by the size of their ownership stake. he research presented in this thesis focuses on 43 financial services firms listed on the Taiwan Stock Exchange and the GreTai Securities Market.he data used in this thesis compares current-year compensation versus previous-year operating performance for each year in the period 2002-2006 to obtain coefficients for each financial services firm. These are then used as independent variables for study of the compensation incentive mechanism.he empirical results show that . The compensation incentive mechanism is positively associated with operating performance. . Impact of the ownership stake on operating performance is not direct and does not significantly affect the impact of the compensation incentive mechanism on operating performance. n addition, this thesis finds that the proportion of independent directors has a significant negative association with operating performance. The directors of financial services firms tend to find external directors who will support their policies, therefore external directors fail to function as independent directors. Therefore, financial services firms should strengthen their internal rules to improve corporate governance.
Subjects
Compensation
ownership stake
operating performance
financial services firms
compensation incentive mechanism
Type
thesis
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