產品市場競爭可否降低公司內部治理機制不佳所導致的代理成本？

Does Product Market Competition Reduce Agency Costs Arising from Weaker Internal Governance Structures?

楊朝旭(Chaur-Shiuh Young)

《管理學報》 21卷2期 (2004/04) Pp. 153-173

https://doi.org/10.6504/JOM.2004.21.02.01

摘要

過去許多代理文獻指出，內部治理機制較弱的公司其代理問題較嚴重，然而這些研究皆忽略了外部治理機制在整體治理體系中所扮演的角色。有鑑於此，本研究之目的係探討產品市場競爭可否降低公司內部治理機制不佳所導致的代理成本。本研究認為，公司治理機制間具有相互替代的特質，因此，產品市場競爭可以降低總經理透過內部治理機制不佳，而從事薪酬極大化行為的誘因。
依據Core et al. (1999) ，本研究採用總經理超額薪酬來衡量公司因內部治理機制不佳所導致的代理成本。以我國上市公司為樣本進行分析後發現，內部治理機制越差的公司，其總經理可以獲取越高的超額薪酬；而產品市場競爭可以降低總經理因內部治理機制不佳而獲取的超額薪酬。本研究之實證結果指出，產品市場競爭可以降低公司內部治理機制不佳所導致的代理成本，顯示其在治理體系中扮演重要的角色，故未來治理機制的研究，及政策制訂者對治理體系的改革，應將外部治理機制的重要性納入考量。

關鍵字

產品市場競爭 ； 公司治理機制 ； 總經理薪酬 ； 董事會 ； 股權結構

並列摘要

A lot of prior studies indicate that firms with weaker governance structures have greater agency problems. For example, using measures of board and ownership structure to proxy for firms’ corporate governance effectiveness, Core et al. (1999) offer empirical evidence showing that CEOs earn greater compensation when governance structures are less effective. Their results suggest that firms with weaker governance structures have greater agency problems and that CEOs at firms with greater agency problems receive greater compensation. While there is mounting evidence of the failure of certain governance structures to motivate managers to increase firm performance, most of these studies ignore the roles of external governance structures in the whole governance system. Product market competition is an important component of corporate governance system (Shleifer and Vishny, 1997). A long academic literature suggests that a competitive product market may play an important disciplining role in managerial employment contracting and incentives (Leibenstein 1966; Machlup 1967). Assessing whether competition does play such a role could have important implications for our understanding of the factors governing both management incentives and corporate performance (Fee and Hadlock, 2000). In view of this, the purpose of this paper is to examine whether product market competition can reduce agency costs arising from weaker internal governance structures.
Building on prior academic research concerning corporate governance, executive compensation and product market competition, I proposed two hypotheses. The first hypothesis of this paper is that the weaker the board and ownership structure, the measures of firms’ internal corporate governance effectiveness used, the higher the CEO compensation level. The second hypothesis of this paper is that product market competition can attenuate the agency costs arising from weaker internal governance structures. As to the operational definition of the internal corporate governance-related agency costs, following Core et al. (1999), I measure the extent of agency costs by the excess compensation that CEOs can earn arising from weaker internal governance structures. The main reason is that CEO compensation is a frequent and observable board decision, and has been the subject of much of the debate regarding the effectiveness of boards of directors. Our measures of board structure are: (1) CEO is board chair (indicator variable); (2) Board size; (3) Family-member directors (% of board size); (4) Interlocked outside directors (% of outside directors); (5) Busy outside directors (% of outside directors). Ownership structure variables include: (1) CEO percentage stock ownership; (2) Outside blockholder owns 5% (indicator variable); (3) Non-CEO inside director owns 5% (indicator variable); (4) Percentage stock ownership per outside director. The board and ownership variables are proxies for the effectiveness of firm’s internal governance structure in controlling agency problems. I also compute a composite variable representing the average within-sample percentile of the related corporate governance variables for the board structure, the ownership structure and the entire board and ownership structure respectively. Low values of the composite variable represent relatively weak internal corporate governance structure.
The test of the first hypothesis is based on including a set of board and ownership structure variables in the compensation regression, along with the hypothesized economic determinants of compensation, such as firm risk, the size of the firm, firm performance, and firm investment opportunity set. My main interest is in the coefficients on the composite metrics of board and ownership structure. If the composite board and ownership structure variables are significantly negative, they provide evidence that poor board and ownership structures are conducive to CEO entrenchment, which is in favor of the first hypothesis of this paper. To test the prediction of the second hypothesis, I interact the competition variable (measured by the Herfindahl-Hirschman Index, HHI) with the composite metrics of board and ownership structure. If competition reduces the extent of CEO entrenchment, I expect the coefficient on these interaction terms to be negative, since low values of HHI imply low levels of industry concentration and hence high levels of competition.
The sample of this study consists of the firms listed on the Taiwan Stock Exchange for the 1996-1999 periods. The data are collected from the Taiwan Economic Journal (TEJ) database, firm’s annual report/proxy statement, the China Credit Information Service’s annual survey report for business groups in Taiwan over the period 1999-2000, the Taiwan Institute of Economic Research’s industry classification codes (TIEIC). Using a sample of Taiwanese listed firms, the regression results show that the estimated coefficients are significantly negative for the composite measures of the of board and ownership structure, after controlling for standard economic determinants of the level of CEO compensation. Thus, the data do support the hypothesis that poor internal corporate governance causes agency costs measured by excess compensation. Specifically, with respect to the board-of-director variables, I find that CEO compensation is higher when the board is larger, the CEO is also the board chair, there is a greater percentage of the board composed of family-member directors, and a higher percentage of outside directors who are interlocking directors or serve on more than three other boards. Regarding ownership variables, I find that CEO compensation is a decreasing function of the CEO’s ownership stake. In addition, CEO compensation is lower when there is a non-CEO inside board member or an outside blockholder who owns at least 5% of the equity. Concerning the test of the second hypothesis, the coefficients on the interaction between the HHI and the composite metrics of board and ownership structure are consistently negative and are significant at the 5% level or lower. This evidence supports the hypothesis that product market competition can　attenuate the agency costs arising from weaker internal governance structures.
Overall, the results show that CEOs at firms with weaker internal governance structures receive greater compensation; and that product market competition can reduce these agency costs. The findings are consistent with the assertion that corporate governance mechanisms are mutually substitutive, and therefore product market competition can attenuate the temptation of CEOs to engage in compensation maximizing activities via poor internal corporate governance structures. This study, as such, empirically demonstrates that competition in the product market acts as a disciplining device. Thus, I suggest that future studies investigating corporate governance issues and policy makers trying to reform the corporate governance system should take external corporate governance structures into consideration.

並列關鍵字

Product market competition ； Corporate governance ； CEO compensation ； Board-of-directors ； Ownership structure

參考文獻

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