| Summary: | 碩士 === 國立中央大學 === 人力資源管理研究所 === 104 === Agency theory provides a complete view on the conflict between shareholders and managers. As an application of agency theory, the incentive compensation plan for executives has been proposed to resolve this problem. Many studies have examined the effect of incentive pay on firm performance from different viewpoints. However, few studies have considered this effect from a strategic perspective. It has been suggested that firms usually
take their own attributes into account when making strategy selection. Therefore, the purpose of this study was to investigate how the usage of incentive pay affects firm performance when considering the endogeneity of incentive pay strategies.
In this study, a treatment effects econometric model was used to exam the endogeneity of strategy. Using a sample of 562 firms listed on the Taiwan Stock Exchange from 2009 to 2013, the results showed that firm performance was much improved by the increasing strategy of the proportion of incentive pay after endogeneity was considered. Regarding corporation attributes that influence the selection of strategies, the ownership of top ten shareholders and the proportion of independent directors on the board of directors were negatively associated with the proportion of incentive pay. The ownership of ultimate controllers, ratio of control rights to cash flow rights, and manager ownership lead to a tendency of firms to select the increasing strategy of incentive pay.
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