Empirical Research On The Correlation Between The Executive Pay And Performance Of Listed Companies In China

With the separation of ownership and control, problems of executive pay are emerging. And problems between owner and senior executives are inconsistent goals, information asymmetry and so on, the severity of which are increased by complexity and uncertainty of modern enterprise management. However signing reasonable compensation contracts with executives can be an effective way to solve above problems. In the knowledgeable era, the competition between enterprises is mainly about talent competition particularly in excellent senior executives who have become the core of enterprise resources. Yet designing the reasonable executive pay can effectively attract and motivate executives to make greatest efforts for improving enterprise performance. In this paper, descriptive statistics, hypothesis test and linear regression analysis method are used to research the relationship between the executive pay and performance of listed companies in China.Through the empirical study, main conclusions are as followings:firstly the enterprise performance is positively related to executive pay.secondly enterprise performance and executive pay have significantly positive correlation in companies of different scale, in spite of the significant differences among different scale, thirdly enterprise performance and executive pay in different industries exist major difference, fourthly enterprise performance and executive pay is positively related in non-state-owned companies, lastly correlation between earnings per share and executive pay is more significantly positive than that between return of equity and executive pay.This paper includes six parts.The first part is the introduction. This part mainly introduces the background, theoretical significance and practical value of the article, and also discusses the research framework, content arrangement and innovation points. The second part is the literature review. The research of relationship between enterprise performance and executive pay at home and abroad are described, then representative conclusions of them are summarized, and then based on them literature reviews are taken.The third part is related definitions and theoretical basis of executive pay. It introduces five related compensation theories, theoretically analyzing the influence mechanism upon which executive pay does to enterprise performance, and the concept of senior executives and enterprise performance is defined.The forth part is the study design. This section includes the source of sample data, selecting principles and the selected variables, and puts forward four hypothesis of this article as well.The fifth part is empirical analysis of the executive pay and enterprise performance. Using SPSS 17.0 for data processing, firstly descriptive statistical analysis can not only analyze the present situation of executive pay and enterprise performance from the overall level, but also compare correlation between executive pay and enterprise performance of the listed company with different scale, different industry and different nature. Secondly, the whole samples and samples classified according to different standards are inspected to verify assumptions, later linear models are established which include several factors affecting the return of pay, and finally results of this paper are summarized.The sixth part is the analysis of empirical results and related suggestions. Based on the empirical results, it puts forward respectively some suggestions for improving executive pay system from the micro and macro level.