| Summary: | 博士 === 國立臺灣科技大學 === 企業管理系 === 104 === Based on data of listed-companies on Taiwan Stock Exchange (TWSE) through 2001~2011, this paper examines whether board independence has effects on executives compensation and corporate performance. Existing studies lacked of considering self-selection of board independence in evaluating the effects of board independence on economic consequence. This may incur estimation bias because systematic factors which determine firm’s pursuing board independence also have influences on economic consequence. While Heckman (1979)’s two-step estimation addresses sample selection duo to unobservable variable, this paper employs propensity score matching (PSM) from Rosenbaum and Rubin (1983, 1985a,b) to address sample selection duo to observable variable, and forms two groups of samples, namely, firms with independent director and firms without independent director but share similar observable characteristics with the former. Empirical evidence from regression estimation shows divergent outcomes under before-matching versus after-matching samples. Before matching, greater degree of board independence is associated with higher profitability and higher level of total/average executives compensation. After matching, outperformance as well as overpay on executives compensation of firm with greater board independence is vanished. After controlling selection bias duo to observables versus unobservables, our evidence concludes that greater board independence is uncorrelated with greater corporate performance and executive compensation overpay.
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