Capital Structure and Employee Pay:Evidence from Taiwan

In recent years, research in capital structure mainly focuses on its effect on the value of firms. The empirical studies about capital structure and the employee compensation are, however, relatively few in number. In this dissertation, I examine the controlled variables of the managerial level and the firm, and conduct the empirical test to study the effect of leverage on compensation. I find that there is a significant and positive relation between leverage and either the managerial cash compensation or average employee compensation. There is an insignificant correlation between leverage and managerial equity compensation. I further separate the samples into electronics firms and non-electronic firms. I find that in electronics firms, there is a significant and positive relation between leverage and either managerial cash compensation or average employee compensation. There is an insignificant correlation between leverage and managerial equity compensation. In non-electronic firms, there is a significant and positive relation between leverage and managerial equity compensation. There is an insignificant link between leverage and managerial cash compensation or average employee compensation.