Shin-Rong Shiah-Hou

Stock bonus compensation and firm performance in Taiwan

Purpose – The main purpose of this paper is to investigate the relative firms’ performances of equity-based compensation schemes using a panel regression approach from Taiwanese experience. Design/methodology/approach - Previous theory considers executive stock options as an important input in the production process, but the empirical support for the performances of equity-based compensation schemes is mixed in developed countries. This paper uses a panel data regression to analyze the influence of stock bonus and executive stock option on performance. Findings - The evidences in Taiwan suggest that there exist positive associations between the amount of stock bonuses and firms’ operating performance. It is also found that firms with larger firm size or high growth opportunity tend to adopt stock bonus. Research limitations/implications - The first limitation is that we the dataset over our sample period 1999-2001 is still incomplete because the executive stock options allowed by the regulation are not prevalent in Taiwan over that period. The second limitation is the unique stock bonus system in Taiwan is not observed for developed countries. Practical implications - The result imply a positive association between stock bonus and firms operating performance. Companies with well-designed bonus compensation may lead to better performance. Originality/value - The unique stock bonus compensation schemes in Taiwan are used in general to contribute to the success of the high-tech companies. This paper first addresses the importance of the stock bonus on compensation issue for high-tech companies. This added knowledge is beneficial to practitioners and academics whose interest lies in equity-based compensation and performance.

A study on intellectual capital and firm performance in biotech companies

This article attempts to understand the influence of intellectual capital on the performance of biotech firms. It provides an integrated framework to clarify the inter-relationship between compensation scheme, human capital and financial performance of listed biotech firms. The sample studied includes 279 biotech firms listed in the US market for the period 1994 to 2005. The results show that the association between patents and Research and Development (R&D) expenditure is found to be positive, although the increase in patents did not significantly improve the accounting performance. The quality of human capital, measured by several factors, is expected to play a positive role in technology innovations and financial performance.

The effect of analyst coverage on CEO compensation structure: evidence from the S & P 1500

Purpose - – What is the role of analysts in reducing agency problems and information asymmetry between stockholders and managers? The purpose of this paper is to confirm the analyst’s role by examining his or her influence on CEO compensation structure. Design/methodology/approach - – The major population for this study consists of publicly traded corporations of the S & - P 1500 for which data on CEO compensation is available from Standard & - Poor’s Execucomp database, along with the proxy statements of these firms. Regression analysis is used to test hypotheses about the effect of analyst coverage on CEO compensation. Findings - – The evidence shows that CEOs of firms with greater analyst coverage or higher analyst coverage quality (analyst coverage index) have higher pay-for-performance (Delta), more compensation incentives to increase firm risk (Vega), more total compensation, and more excess compensation. Even after controlling for the effect of other types of corporate governance, including internal governance and institutional holdings, analysts’ activities still have an incremental effect on CEO compensation structure. Practical implications - – The authors findings may be useful to investors who use analyst coverage to evaluate the firm’s CEO compensation, as it suggests that investors may reference the information about analyst coverage of firms to craft appropriate CEO compensation structures. Originality/value - – The authors results contribute by showing that the extra effect of analyst activities on CEO compensation structure exists, even after controlling for other types of governance mechanisms, such as internal governance and institutional investors’ holdings.