Corporate Governance, Banks Performance and Executive Compensation in Banking

• Main Authors: Wei-Xiang Li, 李偉祥
• Other Authors: Shu-Ling Hsu
• Format: Others
• Language: zh-TW
• Published: 100
• Online Access: http://ndltd.ncl.edu.tw/handle/90504487721828996378

碩士 === 南台科技大學 === 會計資訊系 === 99 === The agency problem occurs when there is conflict among the shareholders and the executive of the company. The executive who run the company and the shareholders who own the company may have different aims of how the company can be run. The executive may prefer to pursue their own interests at the expense of shareholders. For example, East Asian financial crisis in 1997 and Enron case in 2002, and the corporate governance began to be taken seriously. The corporate governance is more important in the banking. The Task Force on Corporate Governance of Banks issued the Policy Brief on Corporate Governance of Banks in Asia in June 2006. The first part of the policy brief is the importance of corporate governance of banks and characteristics of Asian banks. Corporate governance of banks is more important than the general industry. This study attempts to investigate how the executive compensation in the banking could be affected by corporate governance and performance. We use the 26 listed banks in Taiwan as sample. The research period is from 2005 to 2009, and there are 130 firm-years. The empirical results show that the banks with higher ratio of independent directors have the stronger supervisory of directors, and the executive compensation is more stable. CEO duality is positive correlated with executive compensation, but not significant. If the directors pledge shares, then the financial risk of banks is higher. The executives may have more opportunities to pursue their own interests. If the banks belong to Financial Holding Company, then the non-performance loans and fixed operating costs are higher. The poor banks performance leads to the lower executive compensation. Both of the outside directors and the institutional investors are not significant with the executive compensation. Banks performance is significantly positive correlated with the executive compensation. The higher banks performance leads to the high executive compensation.