A Study Of The Impact Of Accounting Earning Attributes On CEO Compensation

The exited studies about compensation-performance relationship showed that the presidents'compensation lies on both accounting performance and market performance. However, their weights coefficients are to compensation are quite different, due to the moderate effect of accounting earning attributes. Therefore, this paper focus on the moderate effects of accounting earning attributes on compensation. By reviewing the previous studies, they merely focus on individual earning attributes. Whereas, this paper try to examine the moderate function that all the earning attributes have on the compensation. By dividing samples into two groups according to their controlling stake natures, the paper tries to search the different impact the accounting earning attributes have on CEO compensation. All of the analysis is meant to provide empirical evidence to the development of compensation mechanism.This paper sets Shanghai and Shenzhen A-share listed companies in 2007-2009 as samples based on the agency theory. Firstly it extracts 5 main factors from accounting earning attributes by using factorial analysis. Secondly, it makes correlation analysis about accounting earning attributes and compensation, which includes change rate of cash, change rate of equity, change rate of total compensation, change rate of equities incentive intensity. Finally, it explores the difference of the earning attributes and the compensation relationships between companies of different controlling stake nature.Empirical analysis shows that in the mixed samples the persist attribute, the growth attribute and the safety attribute have positive effects on cash compensation; the operational effect attribute has a positive effect on equity compensation and total compensation; the growth attribute has a positive effect on equities incentive rate; however, the persist attribute has a negative effects on equities incentive rate. Under the circumstances of different equity control, the non-state owned company prone to detect the financial risk and the usage of assets efficiency, when it comes to assess the CEO's contribution. While, the state owned company prone to detect the earning persistency and the cash flow of the company.