Does the board reward the top manager's social capital? Evidence from Taiwan

ISSN： 1479-4853

Source： International Journal of Learning and Intellectual Capital, Vol.5, Iss.3-4, 2008-10, pp. : 279-295

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Abstract

Although there has been a considerable amount of research investigating the determinants of manager compensation, relatively few studies have considered the question of whether the board values a top manager's social capital. Using a large sample of pooled data of the firms listed on the Taiwan Stock Exchange (TSE) in 2001 and 2002, this study examines the association between a top manager's social capital, defined as external directorship ties held by the top manager, and his or her compensation after controlling for other potential factors that may affect the level of manager compensation. The empirical results show that the top manager's social capital is an important determinant of the top manager's pay level. Moreover, this study also finds that electronics firms and firms in traditional industries value different attributes of the top manager's social capital.