The association between non-executive compensation and firm performance

Chun-You Ko, Hunghua Pan, Li-Chun Kuo and Yen-Chun Ko

Asia-Pacific Journal of Accounting & Economics, 2022, vol. 29, issue 2, 386-401

Abstract: This study uses Taiwanese data, where the disclosure of detailed information regarding employee compensation is mandatory, to calculate non-executive compensation and its components. We find a positive correlation between total non-executive compensation and firm performance. Besides, we find strong evidence that fixed (variable) pay is negatively (positively) correlated with firm performance. Moreover, we find significant positive (negative) incremental effects of fixed (variable) pay on firm performance among companies with high percentages of compensation classified as selling, general, and administrative expenses. Overall, our results suggest that non-executive compensation is highly correlated with firm performance, which has policy and managerial implications.

Date: 2022
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DOI: 10.1080/16081625.2020.1726777

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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