Study On The Influence Of Executive Compensation On Enterprise Performance Of Listed Companies In China

The remuneration of executives of listed companies has been the focus of the business community and academia. Senior management as a listed company’s business decision-making, they play an important role in development of the company. Reasonable and effective executive compensation incentive can lead to the interests of senior management and company owners tend to improve the business performance of listed companies. The U.S. subprime mortgage crisis in2008triggered a global financial turmoil, financial turmoil has made executive compensation, become the focus of the community once again. Executives of listed companies pay the impact on business performance, how to develop effective executive compensation system to improve business performance to become the focus of attention. Executive pay incentives and the effectiveness of the company can guide the rational design of reality, the company executive compensation system; help to enhance the effect of compensation incentives in the actual work to promote the efficiency of companies, and ultimately the interests of executives win-win situation with the performance of the company. Therefore, the study of Chinese listed companies the impact of executive compensation on firm performance relationship is necessary.In view of this, this paper studies the impact of Chinese listed companies executive pay to corporate performance, the following major elements:First, the background, the significance of this study framework. Described in the analysis of domestic and international literature review on the basis of the meaning of commonly used measure of executive compensation, corporate performance, and expounded the principal-agent theory, the three theories of human capital theory and incentive theory. Secondly, the combination of executive compensation and corporate performance overview and basic theory, the status of executive pay Chinese listed companies and corporate performance. In the process of evaluation of business performance indicators selected, profitability, solvency, operational capacity, development capacity four selected12financial indicators, using principal component analysis to the six principal components extracted from the selected financial indicators, respectively, multiplied by each principal component it corresponds to the proportion of total variance, and then sum divided by the total variance contribution rate to extract principal components, namely the principal component model P to represent the business performance. Thus, the analysis on the basis of that the current status and the problems of executive compensation impact on enterprise performance. Again, using EXCEL2007software to collate data on910listed companies2008-2010, executive compensation, executives shareholding ratio as the independent variable, and joined the firm size, risk of corporate debt, corporate ownership concentration company’s free cash flow, industry factors, regional factors affecting the relationship between the two control variables to construct the regression equation between executive pay and corporate performance, while application of the SPSS17.0statistical software selected sample regression analysis. Finally, some countermeasures to improve the remuneration of executives of listed companies in China on firm performance, and hope to provide some reference for the optimization of Chinese listed companies on executive pay and corporate performance enhancement.