Research On Manager Compensation Incentive Effect Of Family-owned Enterprise

As the main body of China private economy, family-owned enterprises play a decisive role in the economic development of our country, its research has the profound historical connotation and realistic significance. With the development of the reform of the economic system and family business, the introduction of external managers caused the separation of ownership and control of the family-owned business. After the separation of ownership and control, agency costs are caused by information asymmetry and inconsistent management goal oriented of manager and owner. While effective incentive mechanism can reduce the agency cost and increase the performance of enterprise. In recent years, the salary incentive problem of the executives has attracted the attention of academia and practice. As a kind of scarce social resources, professional managers have gradually become an important driving force of the development of family-owned enterprise. But for the salary incentive problem of professional managers, the research have not been systematically in academic circles. In terms of professional managers of family-owned enterprises, whether the incentive compensation effects really play a proper role, what is the relevant counter between the monetary compensation, equity compensation and the agency cost of. These questions are what we are trying to answer through the empirical analysis in the paper.In this paper,559 listed family-owned enterprises in Shanghai and Shenzhen from 2010 to 2012 are used as the research sample, We have made a detailed study and analysis to the relationship between professional manager compensation and agency cost in the family-owned enterprises. We discuss the professional managers’compensation incentive effect from two aspects:the overall compensation levels and compensation structure. First of all, we describe the professional managers’compensation by years, industry and area, and then we test the incentive effect of professional managers through the multiple linear regression analysis. Through the research, We come to the conclusion:In the family-owned enterprise, the overall pay levels of professional managers have significant positive correlation with the agency cost; It did not fully play the role of incentive effect, there is still space to improve;The higher the monetary incentive pay, the higher agency cost; The higher the equity incentive compensation of professional manager, the lower the agency cost; In addition, these control variables such as the proportion of the first shareholder, the number of shareholders, board size and asset-liability ratio have a negative correlation with the agency cost. Finally, we put forward some suggestions to improve salary the incentive mechanism of professional managers in the family-owned enterprise.