The Impact Of Capital Structure On Managerial Compensation In Chinese Listed Firms

As for the research background of this essay,top management compensation incentive is one of the key problems among modern firm theories.During the past seven decades,western countries have been enriching the monitoring and incentive of top management through the economy practices,and they carried on the adjustment and innovation for company's incentive mechanism.Going with the reform of economic system have being on for about 30 years,the frame of modern enterprise system has roughly set up,executive compensation incentive system also has improved,but it is still far away from the request of market economy.How to set up effective encouragement and restraint mechanism and to arouse the enthusiasm of executive is an important problem.In the principal-agent theories' point of view,there are many contributing factors of the managerial compensation,and capital structure is one of them.This paper is aim to discuss how this factor influent the managerial compensation.First,the thesis reviews the evolution of compensation decision mechanism process,sum up obstacles of China's reform of the wage system.And,make Literature Review to establish the theory foundation of this paper.The empirical study of executive compensation in Chinese listed companies in 2004-2007 uses the Panel data model.From the empirical researches,we find a significant positive association between executive compensation and Capital structure.Pay-risk significance lever is higher in SOE(state-owned company) than in POE(privately-owned company).And there are other test results:Firm performance,firm size,age and tenure of the manager, size of the board,industry,area have positive association with executive compensation;The lower top shareholder owns,the higher the compensation get.The last chapter introduces the conclusions,innovations and further study directions of this thesis.Regarding to the innovation,this paper studies on the relation between the capital structure and the executive compensation,first to bring the concept of Human Capital bankrupt cost,divided sample into two different type-SOE and POE,and study on the difference of the two type of companies' compensation decision mechanism.