CEO's Incentive And The Listed Firm's Performance

This paper examines the relationship of the CEO's compensation and the firm performance and verify the correlativity of the CEO compensation and the correlative factor on the 2840 listed firms over 2001-2004. Our findings suggest that firm performance is significantly positively related to the CEOs annual pay, show that incentives of CEOs is working and in favor of the increasing of the Corporation's performance; and this paper suggest that CEOs annual pay is significantly positively related to the firm performance at the same time, means that CEOs annual pay increase substantially with the increase of Corporation; the positive relationship of the CEO annual pay and the Corporation performance indicate the rationality and the validity of the incentive mechanism in listed firm, the mutual promotion mechanism of CEOs pay and the Corporation performance has formed, and the incentive mechanism in listed firm in china walk up the right path.In the same time, this paper discover that Corporation performance is weakly positively related to the equity held by the manager, the long term incentive mechanism of the equity held by the managers didn't established, and the Model 4 regression also deny the incentive "interval effect" of the equity held by the manager.The studies on the CEOs compensation suggest: 1. the restriction mechanism of listed firm in china is a rather strong, and the incentive mechanism is a rather weaker; 2. CEOs annual pay is significantly positively related to the firm performance; 3. CEOs annual pay is significantly negative related to the concentration ratio of the first shareholder, means that the first shareholder can strengthen the monitor to the CEO, but the active governance function of first shareholder doesn't work; 4. The CEOs annual pay is significantly positively related to the size of the corporate assets, weaker negatively related to the quality of first shareholder; 5. CEOs annual pay vary significantly with industry. To this situation, this paper proposed a pointed comments.