Is board of director compensation excessive in restaurant firms?

Research output: Journal article publicationJournal articleAcademic researchpeer-review

7 Citations (Scopus)


This study confirms that a firm's size in the previous year significantly increases board of director compensation in the current year, while the number of directors and the firm's capital expenditure significantly decrease it. On average, 31.2% of restaurant firms overcompensate their board of directors, while 33.8% pay less than the expected amount of compensation to their board of directors. However, contrary to public concern, this study argues that the amounts of over- and under-compensation are negligible in proportion to the directors’ total compensation, and thus the issue of over- and under-compensation may not pose a serious problem in the restaurant industry. In particular, the amount of overcompensation has a positive effect on firm growth and capital investment, but does not substantially decrease firms’ operational and financial performance. The amount of overcompensation can even have a positive influence on financial performance, although the effect is not statistically significant.

Original languageEnglish
Pages (from-to)149-158
Number of pages10
JournalInternational Journal of Hospitality Management
Publication statusPublished - Sept 2019


  • Agency theory
  • Board of director compensation
  • Overcompensation
  • Resource dependence theory
  • Restaurant firms
  • Under-compensation

ASJC Scopus subject areas

  • Tourism, Leisure and Hospitality Management
  • Strategy and Management


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