This study examines the impact of abnormal managerial compensation, institutional shareholding and family-business characteristics on future performance. Sample firms are listed on the Taiwan Stock Exchange in the period from 2010 to 2019. We find that abnormal compensation positively affects firms’ future performance, in line with implicit contract theory. In addition, evidence shows that institutional shareholding and family-business characteristics are both vital to firms’ future performance. Specifically, institutional shareholding is not only positively associated with future performance but also increases the effectiveness of abnormal compensation on future performance. Nevertheless, family-business characteristics have an adverse impact on future performance as well as serves as a moderating variable between abnormal compensation and future performance.
