Research On Interaction Among Incentive Intensity Of General Manager, The Constitution Of Director Board And Corporate Value

Board of Directors is an important part of the governance mechanisms, with the supervision and decision-making role; Manager incentives compensation is an important governance mechanism incentives. They constitute the core of the corporate governance. So the study on the relationship between the board of directors and manager incentive compensation and the impact on the corporate value is the topic of corporate governance which can not avoid. Up to now scholars have different opinions on the relationship between them. The scholars give different theories to explain different empirical results, sometimes these theories even seem to contradictory. This article from theoretical and empirical perspective, study the interaction among incentive intensity of general manager, the constitution of director board and corporate value ;we try to explain the empirical conclusions of this paper within a unified framework, in an attempt to further deepen the relations between them.The paper begins with survey of the empirical and theoretical literature on interaction among compensation incentive intensity, the constitution of director board and corporate value, which laid the foundation for the construction of theoretical model and the establishment of assumptions and methods. Then, we construct a theoretical model to analyze the endogenous interactive relationship between compensation incentive intensity of general manager, the constitution of director board and corporate value. Then we select the listed manufacturing corporation in 2001 and 2007 as samples, and use simultaneous equations to examine the interaction relationship between them; The empirical results are: (1) there are significant positive interactive relationship between corporate value and executive incentive intensity;(2) Corporate value have significant positive influence on the proportion of insider directors, but the proportion of insider directors have no significant influence on corporate value. Corporate value and the proportion of independent directors, the size of the board are not determined simultaneously; (3) Executive incentive intensity and the proportion of independent directors & the size of the board are determined simultaneously. There are no significant interactive influence between executive incentive intensity and the proportion of insider directors.In the end, the paper summarize the whole research and result, and then give some suggestions about how to improve general manager Incentive efficiency and board structure.