A Study On The Relationship Between Top Management Pay And Firm Performance Of Listed Companies In Finance And Insurance Industry

Financial crisis began to sweep the major financial markets of the world,such as the United States, the European Union and Japan in August 2007,then it spreaded rapidly around the globe, so did the enterprises in China.The entity enterprises were influenced firstly and next were the financial and insurance enterprises.In the financial crisis situation,the corporate performance of finance and insurance listed companies declined in varying degrees, while the senior executives still had higher salaries,which had aroused widespread concern.Had the higher executive pay in financial and insurance companies increased the corporate performance?This paper selected 18 listed companies in the financial and insurance industry in Shanghai and Shenzhen stock from 2006 to 2009 as the research sample. With the help of SPSS17.0 software, we described the current situation of Top management pay and company performance of the financial and insurance industry,then,we used single linear model to do correlation analysis which is researched the relationship about the executive pay and corporate performance.At last, basing on corporate performance,we designed executive pay determine model of financial and insurance companies using regression model.In the process of correlation analysis and designing regression model,this article used principal component analysis extracting the synthetical index which delegated corporate performance to replace the single index which is used by the previous researcher.The study results showed that:The relationship between Top management pay and corporate performance of sample companies was significant positive correlation in 2006 and in 2009.The relationship between the two was not a significant positive correlation in 2008.The relationship between the two was negative correlation in 2007.This indicated that corporate performance of sample companies was greatly affected by Top management pay in 2006. But in 2007, executive pay had little impact or even negative impact on corporate performance, indicating the higher executive pay of sample companies did not make the corporate performance improve along. It also indicated that executive pay levels were too high in 2007,which caused general concern of relevant government departments and the community. Relevant government departments issued a "salary limit order"and increased supervision to executive compensation in finance and insurance companies.In 2008 and 2009,the relationship between executive pay and corporate performance was a positive correlation. It suggested that government regulation and the enterprise's own policies on the reasonable of Top management pay in finance and insurance played well.