CEO Compensation, Board Independence and Social Ties: Evidence form Taiwan TSE and GTSM Companies

• Main Authors: Yu-Liang Chen, 陳昱良
• Other Authors: Chan-Jane Lin
• Format: Others
• Language: en_US
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/55620890813718729842

碩士 === 國立臺灣大學 === 會計學研究所 === 100 === Prior research suggests that independent director’s social ties with the CEO could undermine the efficacy of a formally independent director in the firm. In this study, I examine the relation between social ties and CEO compensation over the time period of 2006 to 2010 using hand-collecting data from Taiwanese TSE and GTSM companies. My results suggest that CEO compensation is higher when social ties exist between CEO and independent directors. In addition, this study also finds that the impacts of social ties are wholly integrated to affect decisions of independent directors rather than individually affecting them. Moreover, CEO of technology industries might have more social connections with their independent board members and they tend to share social relationships with them through social networks because of limitations of professional knowledge. Consequently, CEO of technology industries would receive higher compensation than other industries. Thus, my findings would be useful in better informing regulators and investors faced with questions related to the possible consequences of CEO-board social ties for business decisions and other concerning economic outcomes.