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Executive pay-performance sensitivity and its consequences: empirical evidence on the role of ownership in Thailand

Executive pay-performance sensitivity and its consequences: empirical evidence on the role of ownership in Thailand
Executive pay-performance sensitivity and its consequences: empirical evidence on the role of ownership in Thailand
Executive compensation has been extensively studied in market orientation economy; consequently the conflict of interest between the Principal and the Agent is clearly defined in a widely-held firm. A concentration-owned firm that dominates Asian capital markets have not such a conflict between the shareholders and the managers, but groups of shareholders in conflict are a concern. Since only one group of owner dominates the decision, executive compensation is hardly believed to be well established. Using a unique Thai listed company’s data between 2002 and 2008 as a sample, this study presents empirical evidence on Agency theory outside the Anglo-Saxon setting. Ordinary least square method, fixed effects, two-stages least squares, generalised method of moments are deployed to test the hypotheses.
In addition to all executive receives base pay, it reveals that bonus is the most common incentive while fewer than 10% of listed companies provide stock option to their executive. The econometric results reveal positive pay-performance sensitivity in Thai listed companies. However, ownership structure does play a vital role in the sensitivity. In a widely-held firm, the positive influence of firm performance on executive compensation is found. The evidence supports that widely-held firms have well established their executive compensation package. In the foreign-owned firm, the positive sensitivity reveals that foreign ownership actively take part in the compensation policy to serve the firm interests. Furthermore; Managerial power suggests that in the imbalance of power between groups of shareholder, there is no pay-performance sensitivity in neither family-owned nor corporate-owned firms. Further evidences indicate that operation cash flow and stock return are the consequence of executive bonus pay.
Swatdikun, Trairong
58b80ded-a3b6-4155-b9b9-fd4539a5b11e
Swatdikun, Trairong
58b80ded-a3b6-4155-b9b9-fd4539a5b11e
Nisar, Tahir
6b1513b5-23d1-4151-8dd2-9f6eaa6ea3a6

(2013) Executive pay-performance sensitivity and its consequences: empirical evidence on the role of ownership in Thailand. University of Southampton, School of Management, Doctoral Thesis, 313pp.

Record type: Thesis (Doctoral)

Abstract

Executive compensation has been extensively studied in market orientation economy; consequently the conflict of interest between the Principal and the Agent is clearly defined in a widely-held firm. A concentration-owned firm that dominates Asian capital markets have not such a conflict between the shareholders and the managers, but groups of shareholders in conflict are a concern. Since only one group of owner dominates the decision, executive compensation is hardly believed to be well established. Using a unique Thai listed company’s data between 2002 and 2008 as a sample, this study presents empirical evidence on Agency theory outside the Anglo-Saxon setting. Ordinary least square method, fixed effects, two-stages least squares, generalised method of moments are deployed to test the hypotheses.
In addition to all executive receives base pay, it reveals that bonus is the most common incentive while fewer than 10% of listed companies provide stock option to their executive. The econometric results reveal positive pay-performance sensitivity in Thai listed companies. However, ownership structure does play a vital role in the sensitivity. In a widely-held firm, the positive influence of firm performance on executive compensation is found. The evidence supports that widely-held firms have well established their executive compensation package. In the foreign-owned firm, the positive sensitivity reveals that foreign ownership actively take part in the compensation policy to serve the firm interests. Furthermore; Managerial power suggests that in the imbalance of power between groups of shareholder, there is no pay-performance sensitivity in neither family-owned nor corporate-owned firms. Further evidences indicate that operation cash flow and stock return are the consequence of executive bonus pay.

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More information

Published date: February 2013
Organisations: University of Southampton, Southampton Business School

Identifiers

Local EPrints ID: 348683
URI: http://eprints.soton.ac.uk/id/eprint/348683
PURE UUID: 069299aa-6fc7-4e16-89ca-cbbe6cd79ca1
ORCID for Tahir Nisar: ORCID iD orcid.org/0000-0003-2240-5327

Catalogue record

Date deposited: 11 Mar 2013 16:34
Last modified: 01 Feb 2020 01:27

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Contributors

Author: Trairong Swatdikun
Thesis advisor: Tahir Nisar ORCID iD

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