臺大管理論叢 NTU Management Review VOL.30 NO.1

CEO Pay Cuts, Corporate Governance and Family Business 92 3. Findings The study finds that CEOs with poor performance in previous periods experience salary reductions, when IND or INS is greater. In addition, when CEOs experience salary reductions, their accounting-based performance consequently improves. In comparison to professional CEOs in a family business, CEOs who are family members are less likely to experience salary reductions due to poor performance. When professional CEOs in family businesses experience salary reductions, they exhibit greater degrees of improvement in accounting-based performance compared to CEOs who are family members. 4. Originality/Contribution The special feature of this study is the use of individual compensation of CEOs within companies to investigate the causes of salary reduction and its subsequent effects. Considering how most enterprises in Taiwan are family businesses (Lin and Hsu, 2008), this study examines the corresponding salary reduction effects in family businesses on family members as CEOs and professional CEOs. The operational strength of family businesses lies in the close relationships among company leadership, which means that family businesses led by their own family members, can more easily communicate with one another and reach a consensus on their financial situations; moreover, their reputation as a family correlate with the reputation of the company. Consequently, family members are often more devoted to the business than other workers. This study examines whether family businesses are a more favorable fit for the stewardship theory and type II agency problem, in comparison to other types of businesses. This study further investigates the differences in the causes and effects of salary reduction among different types of CEOs in family businesses.