Research On The Relativity Between Senior Executives' Salary And Performance Of Company

Executive compensation problem derives on the separation of ownership rights from management rights in modern enterprises, there are many problems such as different objectives, information asymmetry which exist in modern enterprises between owners and executives. The complexity and uncertainty of operating enterprise urged the gravity of this problem. We can solve it through designing and carrying out a benign compensation scheme. In knowledge economy era, the competition among enterprises in essence is the competition of person with ability. Executives become the core resource of modern enterprise, and excellent executives is rare, so how to attract and motivate executives to devote effect to enterprises'operating to enhance the profits of enterprises is the key to the development of enterprises, furthermore, executive compensation has this effect.The study has on the foundation of relative theory and certain research fruit of the foreign and inner scholars proposed a whole set of hypotheses, selected the data of annual companies reports from 2005 to 2009 as a sample. It gives a statistical analysis of the senior executives' salary and the performance of company, then continues to use a Panel data regression model to test the hypotheses listed. Finally, according to the company's owner pattern, the company's industry, the region company located in, it divides whole sample into groups and carries on the empirical research separately to analyze the impacts of the owner pattern, industry and region on the senior executives' salary-performance sensitivity.Through empirical studying, this thesis draws the analysis conclusion as following:Firstly, executives'salary and enterprise performance presents a relatively significant positive correlation, and the impact on the senior executives'salary from the accounting performance is far greater than from the market performance. Secondly, the senior executives'salary-performance sensitivity of non-stated-owned listed companies is higher than state-owned listed companies; the top executives'salary-performance sensitivity of the companies in the competitive industries is higher than the companies in some monopoly industries; the top executives'salary-performance sensitivity of companies in the central and western areas is higher than the companies in the eastern area. This study has deepened our insights towards the relationship between senior executives'salary and company performance among China's publicly listed companies. It uses five years'data to construct a panel data model, expands the scope of data and improves the reliability of the research conclusion. By conducting a study on the relationship between senior executives'salary and enterprise performance based on a multi-level empirical test, it also helps to filled in the research gap and thus it has further significance.