In this study, we examine the interactive effect of executive compensation, firm performance and corporate governance in different institutional and governance settings of an emerging market economy. Capturing monitoring and incentive alignment aspects as suggested in agency theory, we argue that in a markedly different executive compensation system in Thailand, the interrelationships between executive compensation, firm performance and corporate governance would exhibit some similarities to those found in developed economies. We find evidence of a reciprocal positive significant relationship between compensation and performance, as well as between corporate governance and performance. However, a reciprocal relationship is not found between corporate governance and compensation, which shows a mono-directional positive significant relationship running from corporate governance to compensation. These findings show similarities with those of developed economies and provide support for the need for an effective governance system to determine optimal executive compensation that will enhance firm performance and value. Our findings thus add some potentially noteworthy dimensions to the compensation literature that are especially important to policy makers and other stakeholders, and aiming to shape an optimal governance system in the emerging markets around the world.

Farooque, O. A., Buachoom, W., & Hoang, N. (2018). Interactive Effects of Executive Compensation, Firm Performance and Corporate Governance: Evidence from an Asian Market. Asia Pacific Journal of Management.