TY - JOUR
T1 - The sensitivity of compensation to social capital
T2 - Family CEOs vs. nonfamily CEOs in the family business groups
AU - Young, Chaur Shiuh
AU - Tsai, Liu Ching
N1 - Funding Information:
The authors gratefully acknowledge Editor-in-Chief Arch Woodside, Associate Editor Jean B. McGuire, and two anonymous reviewers for their insightful comments and suggestions. Chaur-Shiuh Young is grateful for a grant from Taiwan National Science Council (project number NSC 93-2416-H-194-038-) that supported this research.
PY - 2008/4
Y1 - 2008/4
N2 - This study examines the role of CEO social capital, defined as external directorship ties held by the CEO, in determining family vs. nonfamily CEOs' compensation in a network-based business society and governance system. Using a sample of pooled data of family firms listed on the Taiwan Stock Exchange (TSE) from 2000 to 2002, the empirical results show that CEO social capital is an important determinant in setting nonfamily CEOs' pay level, consistent with the expectation of the contractual governance model. By contrast, as expected by relational governance model, family CEOs' social capital is not incentive-relevant. This study extends the literature on CEO compensation by documenting that in a market where guanxi and connections are considered valuable business tools, corporations will be willing to compensate professional CEOs for the social capital that they bring to the firm.
AB - This study examines the role of CEO social capital, defined as external directorship ties held by the CEO, in determining family vs. nonfamily CEOs' compensation in a network-based business society and governance system. Using a sample of pooled data of family firms listed on the Taiwan Stock Exchange (TSE) from 2000 to 2002, the empirical results show that CEO social capital is an important determinant in setting nonfamily CEOs' pay level, consistent with the expectation of the contractual governance model. By contrast, as expected by relational governance model, family CEOs' social capital is not incentive-relevant. This study extends the literature on CEO compensation by documenting that in a market where guanxi and connections are considered valuable business tools, corporations will be willing to compensate professional CEOs for the social capital that they bring to the firm.
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U2 - 10.1016/j.jbusres.2007.07.022
DO - 10.1016/j.jbusres.2007.07.022
M3 - Article
AN - SCOPUS:39649110318
VL - 61
SP - 363
EP - 374
JO - Journal of Business Research
JF - Journal of Business Research
SN - 0148-2963
IS - 4
ER -