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The association between non-executive compensation and firm performance

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  • Chun-You Ko
  • Hunghua Pan
  • Li-Chun Kuo
  • Yen-Chun Ko

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.

Suggested Citation

  • Chun-You Ko & Hunghua Pan & Li-Chun Kuo & Yen-Chun Ko, 2022. "The association between non-executive compensation and firm performance," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 29(2), pages 386-401, March.
    • Handle: RePEc:taf:raaexx:v:29:y:2022:i:2:p:386-401
    DOI: 10.1080/16081625.2020.1726777
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