Effect of the Trade-off Between Compensation and Corporate Social Responsibility on Taiwanese Multinational Corporations

Abstract

Agency problems are more severe for multinational corporations (MNCs) and multinational enterprises compared to their domestic counterparts. As companies develop diversified operations, their managers face more challenges. An incentive compensation structure has been designed to align the benefits of managers with those of shareholders. Additionally, corporate social responsibility (CSR) has become increasingly crucial for companies. MNCs must gain the trust of more investors to improve their corporate reputation and financial performance. CSR enables MNCs with a high sense of social responsibility to expand their investor base, reduce perceived risks, and decrease information asymmetry. Our empirical findings reveal that Taiwanese MNCs can enhance their performance by implementing cash-based compensation and pursuing CSR activities.

Citation

Della Chang, J.-C., Feng, Z.-Y., Wang, W.-G. and Tsao, F.-C. (2023), "Effect of the Trade-off Between Compensation and Corporate Social Responsibility on Taiwanese Multinational Corporations", Lee, C.-F. and Yu, M.-T. (Ed.) Advances in Pacific Basin Business, Economics and Finance (Advances in Pacific Basin Business, Economics and Finance, Vol. 11), Emerald Publishing Limited, Leeds, pp. 267-304. https://doi.org/10.1108/S2514-465020230000011012