African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4125

Full Length Research Paper

The effect of profit incentive of ICT industry on the relationship between ownership and corporate performance

Wen-Chih Liao1 and Szu-Min Chien2*
1Department of Business Administration, National Taiwan University of Science and Technology, Taipei City 106, Taiwan. 2Taiwan Institute of Economic Research. 7F, No.16-8, Dehuei. St., Jhongshan District, Taipei, 104, Taiwan Taipei City 104, Taiwan.
Email: [email protected]

  •  Accepted: 25 June 2013
  •  Published: 14 July 2013

Abstract

ICT industry dominated the global economic development in recent years, and Taiwan ICT industry was an important center for the global ICT development. This study analyzed the relationship between the ownership structure and performance of ICT firms in Taiwan. The subjects in the study were 199 ICT firms from 1994~2004. The empirical results showed that the effect of profit incentive on directors and managers was distinct in ICT industry. Directorial ownership had a positive effect on performance and performance also had a positive effect on directorial ownership; they were consistent with the convergence-of-interest hypothesis. However, managerial ownership had a negative effect on performance, and it was consistent with the entrenchment hypothesis. On the other hand, performance had no significant effect on managerial ownership. That was because the stock bonus ratio was low, and managers were free to sell off shares anytime, and managerial ownership kept low percentage all the time.

 

Key words: Corporate governance, performance, ownership structure, ICT Industry.