The Impact of Compensation Committee Quality and Firm Performance on Management Compensation: Evidence from Taiwan

The purposes of establishing a compensation committee are to enhance the transparency of management compensation, operate internal and external oversight mechanisms, and render management compensation more reasonable. This paper examines the impact of compensation committee quality and firm performance on management compensation within the Taiwanese electronics industry by regression analysis. The empirical results show firm performance and compensation committee quality are positively related to management compensation. The results provide a reference for promoting and constructing a policy for establishing compensation committees. The results also can provide a reference point for firms in emerging economies that seek to implement compensation committees.