Abstract
This study examines the impact of differences between senior manager compensation and salaries of full-time employees in non-management positions (DME) on corporate governance evaluation system (CGES). It seeks to understand whether corporate governance can consistently promote the success of company insiders, outsiders, and improve the corporate governance structure’s supervision. Empirical results show that DME has a positive influence on CGES in Big 4 CPA firms, which have better corporate governance evaluation levels. Deloitte, PWC, and KPMG have significantly better evaluation ratings of corporate governance. In addition, different types of conglomerate control for DME manager governance and co-governance have greater positive effects. Finally, non-change lead CPA, change concurring CPA, and non-change concurring CPA show that companies have better corporate governance evaluation. To encourage listed companies to attach importance to the level of corporate governance and assist in the effectiveness of capital market operations, a company should review and promptly implement an overall remuneration policy to comply with corporate governance trends. All listed companies can gradually implement and improve corporate governance to assist investors and other companies in understanding their effectiveness.
Highlights
The outbreak of a series of financial statement fraud cases in Taiwan and other places, such as Enron, WorldCom, Procomp Informatics, and Rebar, the issue of corporate governance quickly regained attention
Big 4 CPA firms, and non-Big 4 CPA firms, this study finds companies with Big 4 CPA firms have higher governance evaluation systems, larger DME, larger company size (SIZE), higher return on assets (ROA), a higher dividend payout ratio (DP), a higher board of directors’ stock holding ratio (BHold), a higher manager shareholding ratio (MHold), larger holdings of foreign investors (Foreign), a lower debt ratio (DE), a larger proportion of directors serving as managers (PDM), greater government agencies holding shares (Public), and a younger age of company establishment (AGE)
This study uses the difference between senior manager compensation and the salaries of full-time employees in non-management positions effect on the corporate governance evaluation system in the regression analysis
Summary
The outbreak of a series of financial statement fraud cases in Taiwan and other places, such as Enron, WorldCom, Procomp Informatics, and Rebar, the issue of corporate governance quickly regained attention. The publication of the evaluation results would help companies compete and strengthen their level of corporate governance and naturally push corporate governance into corporate organizational culture. This would thereby enhance the overall level of corporate governance, enable all listed companies to gradually improve and implement more effective corporate governance, and assist investors and enterprises to better understand the effectiveness of corporate governance implementation. In 2006, the United States Securities and Exchange Commission (SEC) regarded the remuneration of senior managers as the top priority of corporate governance and required listed companies to disclose their overall compensation of executives and board members, Taiwan exposed the remuneration table for directors, supervisors, and general managers.
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