英文摘要 |
This paper investigates whether less compensation weight is placed on negative earnings than on positive earnings in determining top executive compensation, shielding executive compensation from loss. In addition, this paper examines whether the shielding behavior is consistent with the contracting efficiency hypothesis, which contends the purpose of shielding is to enhance risk-sharing between the managers and shareholders, or with the managerial entrenchment hypothesis, which contends that entrenched managers influence their own pay arrangements to favor themselves. Accordingly, it is expected that executive job risk and managerial influence are positively related to degree of shielding. Finally, according to agency theory, stronger governance structure is expected to set up incentive alignment mechanisms that alter the risk orientation of agents to align them with the interests of principals, and it also can reduce the degree of shielding resulting from managerial influence. Investigating a sample of Taiwanese listed firms from 1999 through 2003, our empirical results support each of the hypotheses of this paper. |