Executive compensation and firm perfomance in Korea

Title
Executive compensation and firm perfomance in Korea
Authors
Kato, TakaoKim, Woochan
Keywords
executive compensation; corporate governance; Korea
Issue Date
2004-02
Series/Report no.
KDI Working Paper Series;04-01
Abstract
This paper provides the first rigorous econometric estimates on the pay-performance relations for executives in Korea. To do so, we have assembled for the first time a pooled cross-sectional time-series dataset on 251 firms that were included in KOSPI200 for at least two consecutive years from 1998 to 2001. Contrary to a popular belief that Korean corporate governance and the structure of Korean executive compensation is considerably different from elsewhere in the West, we find that cash compensation of Korean executives is statistically significantly related to stock market performance and that the magnitude of the sensitivity of pay to stock market performance is comparable to Japan and the U.S. Moreover, alternative performance measures (such as accounting performance and sales) is found to play a less important role in the determination of Korean executive compensation. Finally, we find evidence that non-Chaebol firms structure their executive compensation so as to reward their executives for improving shareholder value more so than Chaebol firms. The evidence is consistent with the recent literature on the nature of Chaebols in Korea.
URI
http://archives.kdischool.ac.kr/handle/11125/17002
Files in This Item:
Appears in Collections:
KDI School Working Paper Series


Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.