Impact of Executive Characteristics, Corporate Governance and Firm Performance on Paying Executive Compensation of Listed Companies on the Stock Exchange of Thailand

Abstract

The objectives of this research were (1) to study the relationship among executive compensation, expectancy theory, agency theory, stewardship theory and motivation theory; (2) to analyze the relationship among executive compensation, executive characteristics and firm performance, according to expectancy theory and motivation theory; (3) to analyze the effect of executive characteristics on executive compensation and corporate governance; (4) to study the relationship among executive compensation, executive characteristics, firm performance and firm characteristics. Quantitative analysis was employed for this research. The Panel Data Random Effects Model had been used for data analysis The samples of 1,660 were drawn from listed companies, in all industries except the finance, security, banking and insurance groups, registered during 2009 to 2013 of the Stock Exchange of Thailand. The research revealed that 1) male executives were paid higher than female executives. In addition, if there were substantial proportions of independent directors and ownership concentration, the executive compensation would be less. On the other hand, where the firm performance was well, the executive compensation would also be high; 2) there was high executive compensation in the companies where CEO and executives were male and firm performance was good. Additionally, executive compensation was high if top male executives held Master degree and higher education; 3) there was less payment to executives in the companies where there were large quantity of male top executives and male ownership concentration as well as among independent directors; 4) there was high executive compensation in the companies where top executive were male and firm performance were good with large size likewise, the companies with male executive team with good firm performance and large in size and years of enterprise, paid higher to executives. This research finding can be informative to directors where hiring male or female executives. Male executives tend to have higher expectation on compensation than female executives. In order to motivate male executives to work for enterprises. Companies have pay high compensation, including cash and welfare. The performance of executives should be measured through firm performance in order to motivate executives to work efficiently. Investors can also benefit from the study regarding the gender of executives, before selecting the companies to invest. The substantial proportion of independent directors of enterprises showed that the companies had good corporate governance. The good proportion of ownership concentration would control executives not to seek own benefits over that of the organization. Companies that paid high compensation to their executives resulted in high firm performance. Then, shareholders would receive higher returns on investment. The large size and long years of operation indicate security of firms. However, the study showed imbalance ratio of female and male executives. Thai government should find ways to encourage equal payment to both genders for improved corporate governance.