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Featured Scientist
Author published in" Corporate Governanc"affiliate to

College of Management

Yi-Ping Liao.

Department of Accounting,

Fu Jen Catholic University, New Taipei city, Taiwan

Article published in 

"Corporate Governance: An International Review"

Volume28, Issue2, March 2020, Pages 141-156

Friendly compensation committees and pay-for-luck asymmetry: Evidence from Taiwan

The study examines whether the presence of social ties between compensation committee members and executives explains pay-for-luck asymmetry in compensation, which means that the compensation contracts reward executives with higher pay for good luck but minimally penalize them with lower pay for bad luck. Research Findings/Insights We find that half of our sample firms have a friendly compensation committee, defined as the majority of the committee members having at least two social ties with executives. For firms with a friendly compensation committee, executives tend to be rewarded for good luck but not be penalized for bad luck, which indicates the presence of pay-for-luck asymmetry. For firms without a friendly compensation committee, their executive compensation is not associated with good luck or bad luck. ocial ties information.[ Full article]