英文摘要 |
This study examines whether the establishment of compensation committees and the governance quality of the committees improve the association between top executives' cash compensation and accounting performance (i.e., pay-performance sensitivity). Using a sample of Taiwanese-listed firms over the period spanning 2009-2012, the empirical results support our argument that the establishment of compensation committees has a positive effect on pay-performance sensitivity. We also find that, after the mandatory establishment of compensation committees in 2012, the positive association between top executives' cash compensation and accounting earnings is more pronounced when the quality of compensation committees is high. Overall, our findings indicate that several characteristics of compensation committee quality (e.g., attendance, multiple directorships, members' tenure and committee size) have a significant impact on corporate governance mechanisms. In summary, the role of compensation committees in improving pay-performance sensitivity depends on specific characteristics of its committee members. |