Empirical Research On Influencing Factors About Executive Compensation

The executive compensation system is one important component of the corporate governance mechanism in a listed company. Executive compensation mechanism is committed to addressing principal-agent problems in the agency corporate governance. As the ownership and control is separated in a modern company, resulting in problems between the owners and managers, such as Inconsistent goals and asymmetric information, the executive compensation system is aimed to set up a reasonable salary to achieve the incentive and restrictive about executive behavior. According to classical theories, the optimal executive com-pensation contract should be a linear combination of accounting indicators and market indicators reflect the company's performance. Based on the analysis that because of systematic risk exists in management process, and executives tend to determine their actions by their own interests, so the optimal executive compensation contract should conclude systematic risk and human capital.Based on the theoretical analysis and executive pay data of listed companies in China from 2005 to 2009, this article gives an empiricall study on influencing factors about executive compensation, and also examine after the financial crisis if the executive compensation is "too high". The empirical results show that, variables of company size, performance, executive human capital and regions of companies have a significant impact on executive compensation, and number of competitors, company size, features of corporate governance and regions of companies significant impact the executive differential pay. When the sample is divided into samples of the financial sector and non-financial sector samples, we find that human capital has a stronger role on financial sectro. And as we use director compensation instead of executive compensation, conlusions show that systematic risk has a signficant impact. Furture, we take an examination on if the executive compensation is "too high" using the regression line, and we find that there exist a statistical significance between Before the financial crisis and after the financial crisis. Reserch on correlation between differential pay and company performance confirms that tournament theory is appropriate to explain the differential pay phenomenon about listed companies in china.At last, based on the results of empirical research, this paper gives proposals on how to improve the executive pay system and the space for further research.