The Relationship Between Executive Compensation And Enterprises Performance Of Household Appliances Listed Companies

As the direct agent of enterprises, senior executive has power to allocate corporateresources. Senior executive who has high scarcity, high value and difficult to imitate isthe corporate decision makers and executors. They play a very important role inenterprises management, value creation, core competitiveness building and maintaining.Executive pricing which is related to enterprises performance is a hot theme inacademic circles all over the world. As an important part of the incentive mechanism,compensation incentive is a main way to promote senior executive to raise effort level,to make reasonable decision, to enhance enterprises performance and to prevent fromself interested behavior. It is particularly important for competitive industry to select anappropriate marketing strategy. Household appliance industry always has highmarketing expenses. Therefore, this paper aims to study the internal mechanism amongexecutive compensation, tendency of marketing strategy and enterprises performance ofhousehold appliance industry which will be helpful to improve the efficiency of humanresources management, marketing management and further, enhance enterprisesperformance.This paper is based on the characteristics of Chinese social and economicenvironment, Principal-agent Theory, Optimal Compensation Contract Theory andSustainable Development Theory. It has theoretical significance because it introducesmarketing strategy tendency as mediating variable and constructs a multiple regressionmodel among the variables of executive compensation, tendency of marketing strategyand enterprises performance, which is different from the previous model studied thethree elements respectively. Meanwhile, it has prominent practical significance tostandardize executive compensation, lower the risk of moral and enhance enterprisesperformance, as well as certain reference significance for other industries.This paper is based on existing literatures and the original data of householdappliance industry from2006to2013. It collects and analyzes data, establishes modeland tests research hypothesis around the study object to prove the inner relationship ofexecutive compensation, tendency of marketing strategy and enterprises performance bythe analysis statistic methods such as descriptive statistics analysis, correlation analysisand linear regression model. The main contents and achievements are as follows: Firstly, this paper uses enterprises performance as dependent variable. Enterprisesperformance is a highly comprehensive concept, so selects rate of return on total assets,rate of return on equity, earnings per share and rate of operating income growth to builda comprehensive performance indicator.Secondly, this paper constructs a multiple regression model which has executivecompensation as independent variable, enterprises performance as dependent variable,introducing enterprise scale, ownership concentration, capital structure as controlvariables. Finally it introduces tendency of marketing strategy as mediating variable toprove if the mediating effect exists between executive compensation and enterprisesperformance.Thirdly, this paper put forward10hypotheses combing the previous researcher’sresults.6hypotheses are absolutely passed through the verification.2hypotheses arepartially passed through the verification.2hypotheses are not passed through theverification. The research results indicated that manager compensation has the positivecorrelation with tendency of marketing strategy and enterprises performance. Directorcompensation has the positive correlation with enterprises performance and not provedthe positive correlation with tendency of marketing strategy. Tendency of marketingstrategy has the positive correlation with enterprises performance. Tendency ofmarketing strategy is the mediating variable between manager compensation andenterprises performance. It’s not improves between director compensation andenterprises performance.In this paper, the main innovation is:Firstly, from the point of the research content, few scholars research therelationship among executive compensation, tendency of marketing strategy andenterprises performance. Therefore, this paper mainly researches for this relationship.Secondly, from the point of empirical studies, scholars generally research therelationship between executive compensation and enterprises performance, lessinvolved in tendency of marketing strategy. In order to make research conclusion moreaccurate and complete, this paper introducing tendency of marketing strategy asmediating variable.