THE INFLUENCE OF MANAGEMENT COMPENSATION ON DIVERSIFICATION STRATEGY

Tzu-Ching Weng, Chieh-wen kuo Chem and Pei-Jung Lee

Global Journal of Business Research, 2022, vol. 16, issue 1, 17-40

Abstract: The main purpose of this study is to examine the effects of managerial compensation on corporate diversification strategy. Managerial compensation is not only related to personal income but also closely linked to the firm’s equity and long-term development strategies. In the pursuit of self-interest by the principal and the agent, both parties seek to maximize their benefits. Previous studies have indicated that related diversification is better for resource sharing and synergy, leading to a category economy. This study uses valid sample observations to analyze narrative statistics, and then uses ordinary least square linear regression analysis. This leads to the following conclusions: First, the compensation system for manager rights and interests is positively correlated with the overall degree of diversification. Second, the system of cash compensation for managers is relatively irrelevant to the overall degree of diversification. Third, the size of the company is positively correlated with the degree of overall diversification.

Keywords: Management Compensation; Corporate Diversification Strategy (search for similar items in EconPapers)
JEL-codes: G32 G34 M41 (search for similar items in EconPapers)
Date: 2022
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