On The Influence Of Senior Executive Compensation On Its Profitability Of Small And Medium-sized Listed Companies In China

In this era of knowledge economy, with the increasingly fiercemarket competition, talent competition is related to the corecompetitiveness of enterprises directly. The senior managers, as the corepolicy-making level of enterprises, have an great influence on theirhealthy growth. And how to incent the senior managers efficiently toachieve the goal of maximizing benefits becomes a hot topic attractingattention from all walks of life. This paper, based on the data of2010-2012from the companies listed on Shenzhen SME stock market,studies the influence of senior compensation on its profitability of smalland medium-sized listed companies in China.First of all, the paper explores the research background and pointsout the necessity of the study; by reading and processing a large numberof literature data, collates and summarizes the relevant research results athome and abroad; clarifies the thoughts and methods.Secondly, the paper introduces the definition of SMEs in our country,senior executive compensation, and the profitability of enterprise;elaborates the related theoretical basis of the study; analyzes the presentsituation of SMEs listed in our country and their profitability.Thirdly, the paper, on the basis of theoretical research, puts forwardthe corresponding research hypothesis, and describes the variables design and model construction; analyzes the influence of senior compensation onits profitability of SMEs in the method of factor analysis, regressionanalysis and independent-samples T test. The study shows that theprofitability of company will be improved with the growth of seniorexecutive compensation; there are no correlation between share-holdingrate of executives and the profitability of listed SMEs; executivecompensation did not show significant difference under the differentownership concentration.Finally, combining the research conclusions with the characteristicsof SMEs in our country, the paper puts forward relevant policysuggestions, mainly are as follows: maintain a proper ownershipconcentration; design a scientific and reasonable salary appraisal system,and increase its transparency; combine the short-term incentive withlong-term incentive to improve the senior executive compensationincentive mechanism; perfect the corporate governance structure of listedSMEs, and strengthen the internal supervision mechanism of enterprises;optimize the environment of capital market, reform and improve therelevant laws and regulations.