Abstract

This study explores the problem of the communities of interest that form when management and ownership overlap. Samples were obtained from the Taiwan Economic Journal (TEJ) data bank from 2005 to 2011. The results of non-family-controlled international businesses show that business accounting performance is improved when directors serve as managers; however, if control rights exceed ownership rights to a great extent, business accounting performance declines. The results of family-controlled international businesses show that directors who serve as managers can monitor compensation effectively; however, if control rights exceed ownership rights to a great extent, communities of interest can pursue selfish interests. In this study, we suggest that directors serve as managers to improve business performance and supervise managers’ compensation. Moreover, controlling shareholders should serve as board members with a certain proportion to prevent excessive interest assimilation.

 

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