Corporate Loss Directors’ Self-Fertilization and Financial Performance ? Evidence from Taiwan

Abstract

The purpose of corporate governance is to design a supervision and balancing mechanism to oversee company performance and protect shareholders and stakeholders’ interests Article 14-6 of Securities and Exchange Act requiring a “Remuneration Committee” was included in November 2010 to provision reasonable remunerations for directors supervisors or managers The “FATCA” issue where companies are sustaining serious losses but directors supervisors and managers still receive high pay has long existed for TAIEX and OTC listed companies However since there are no laws governing the imposition of penalties the Financial Supervision Commission R O C (Taiwan) can only request TAIEX and OTC listed companies to disclose directors and supervisors’ remunerations and provision the disclosure of remunerations for the previous year at the annual shareholders’’ meeting for a fair social judgment This study explores the correlations among directors and supervisors of companies sustaining losses but fatten their purses financial performance shareholders’ return on equity; ROE and return on asset; ROA 936 TAIEX listed companies in Taiwan were adopted as samples 9761 entries The sample period was 11 years from 2006 to 2016 The analysis in this study is divided into three parts: An analysis of the sample company’s basic information a correlation analysis and a hypotheses verification The basic analysis was carried out using descriptive statistics and the hypotheses verification through the ordinary least squares estimator; OLS Empirical results show a significantly negative correlation between an increase/decrease in directors and supervisors’ remunerations and company financial performance

Date of Award	2019
Original language	English
Supervisor	Hsuan-Chu Lin (Supervisor)