Ultimate Control Rights, Senior Executive Incentives System And Enterprise Value

The Sustainable development of our economy, the trend of the financial sector and the international increasingly connection brought serious challenges to China’s financial industry. Promoting the value of financial enterprises, enhance the international competitiveness has become especially important. Ultimate control rights and executive incentives are the two important factors that affect enterprise value, so the related research in ultimate control rights, executive incentive and financial enterprise value has important practical significance.This article mainly aims to solve two problems:Firstly, the relationship between ultimate control rights, executive incentive and financial enterprise value. Secondly, the ultimate control rights and executive incentive under the conditions of different equity will lead to what kind of influence on financial enterprise value? The whole study framework is from theory, through status quo to orientation design, conclusions and advice. And research approach is put forward problem-analysis problem-solve problem. The main content is summarized as follows:The first part is to put forward questions. On the basis of introducing the related background and theoretical knowledge put forward the research questions, research purpose and significance. Through the analysis of related literature at home and abroad, the author find out the internal and external factors of ultimate control rights, executive incentive and enterprise value relations in the financial industry. Finally, the main body of this paper is introduced by the literatures and the analysis of research status quo. The second part is to analyze the problem. Mainly includes two parts:the situation analysis and empirical analysis. The situation analysis section focuses on analysis of basic situation in China’s financial industry. Through comparing with other industries, further analysis of China’s financial industry in ultimate control rights problem and executive incentive problem. In the empirical analysis, on the one hand, during2008-2012for five years sample data in China’s financial listed companies as the research object, respectively analysis the ultimate control rights and financial enterprises value, executive incentive and financial enterprises value. And further validate in different high or low level ultimate control rights, executive incentive for financial companies and enterprises value. On the other hand, the financial listed companies are classified by ownership property; expect to get the relationship between ultimate control rights, executive incentive and financial enterprise value under the condition of the different nature of the equity,.The third part is to solve the problem. Through the theory analysis and empirical test results, we put forward the conclusions and policy Suggestions for China’s financial listed companies.In this paper, we draw some useful conclusions.1. Ultimate control rights in the financial industry contribute to the ascension of the enterprise value.Through present situation of the statistical analysis to the ultimate control rights of all financial listed companies in our country:More than74%of the financial companies have ultimate control rights and the ultimate controlling shareholders all retain higher stake proportion. All listed companies include19industries, in addition to three big state monopoly industries, financial industry’s level of ultimate control rights ranked No.4on average. It shows that an ultimate control right is common in the financial industry in our country. Empirical proof:there is a significant positive correlation between financial enterprise value and ultimate control rights. It indicates that a widespread ultimate control right is reasonable in financial companies. The ultimate controlling shareholder can reduce agency costs to improve company performance.2. Executive Equity incentive is better than salary incentive in the aspect of improving financial enterprise value.The results show that executive compensation in financial listed companies is seven times as much as other industries. In2012, the nine of the highest-paid executives in our country’s listed companies, financial companies’ executives possess seven. It reflects the abnormal high salary in financial industries. But the results did not show the correlation between executive pay and corporate value. The results show that executive’s equity incentive can improve financial enterprise value. Thus the executives’ incentive mechanism needs to improve in financial industry.3. Executive’s equity incentive for the enterprise value is significantly positively related to the ultimate control rights.Empirical results reflect that executive’s equity incentive for the enterprise value is significantly positively related to the ultimate control rights in financial company. Therefore we should pay more attention to ultimate control rights and executives shareholding.4. Comparing with state-owned enterprises, the significantly positively correlation between Ultimate control rights, executive equity incentive and corporate value is more sensitive in non-state-owned financial enterprise.Classified the sample data according to the nature of equity, respectively research the relationship of the ultimate control rights and enterprise value, executive incentive and enterprise value. Comparing with state-owned enterprises, the significantly positively correlation between Ultimate control rights, executive equity incentive and corporate value is more sensitive in non-state-owned financial enterprise. This may be due to the state-owned financial enterprise have the administrative duties and mode. State-owned financial enterprises need deepen the reform and establish long-term effective supervision mechanism.The contribution of this study is mainly manifested in the following respects:1. Scholars are mostly based on the separation of ultimate control rights and cash flow rights. Use it as the breakthrough point to study the enterprise value. But based on more and more high executive pay and executive’s stock equity in the financial industry, few scholars research the relationship between executive incentive and financial enterprise value under the different of ultimate control rights.2. This paper confirmed that executive’s equity incentive has better effect for the value of financial enterprises than executive compensation incentive. It provides new conclusions and reform thought for the financial industry.3. According to the nature of equity, financial industry can be divided into state-owned and non-state-owned. So the advices respectively, research significance and more deeply in different financial enterprises.