ABSTRACT
State enterprises play an important role in Thailand’s economy. Good governance practices promote economic and social development, while a lack of these practices hinders the national development and competitiveness. In 2014, Thai state enterprises performed poorly compared to the previous year. Thai Airways International Public Company Limited (THAI) had the largest deficit among all the other state enterprises. Its poor financial performance needed improvement. For this reason, this study was undertaken to examine how well the board of directors of THAI monitored the firm’s performance and how well they motivated the chief executive officer (CEO) to achieve its stated goals using compensation incentive. The study provided policy recommendations to the relevant organization, the State Enterprise Policy Office (SEPO), for overseeing the operation of state enterprises in Thailand. Findings revealed that the board of directors of THAI did not perform well in monitoring the CEO’s performance and designing the management incentive. It was recommended that the board should actively monitor and control the actions of the CEO, limiting mismanagement of the company’s resources and inefficient operations. The SEPO should be empowered to have the authority to regulate state enterprises in order to ensure that proper governance mechanisms are maintained.
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No potential conflict of interest was reported by the author.
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Suthamma Nitikasetsoontorn
Suthamma Nitikasetsoontorn is a lecturer at Faculty of Political Science, Chulalongkorn University, Thailand. She obtained a Ph.D. in Development Administration from National Institute of Development Administration, Thailand. Her research interests include governance in public sector and public finance.