Research On The Relationship Between Executive Incentives Mechanism And Corporate Performance In Electric Power Listed Companies

For modern enterprises, constructing an efficient executive incentives mechanism has become the key of improving corporate governance. However, in the affect of external and internal factors, such as policy environment and industry nature, the effectiveness of executive incentives of China’s electric power listed companies has yet to be tested. Meanwhile, in the aspect of theoretical studies on the relationship between executive incentives and corporate performance, the findings are not uniform and lacking empirical evidences of particular industries. Therefore, this paper expanding empirical research on the relationship between executive incentives and corporate performance of electric power listed companies is theoretically valuable and practically significant.According to the approach of "normative study-empricial test-proposal analysis", this article is mainly divided into three parts:Firstly, we reviewed relevant theories and studies, revealed the current level of domestic electric power enterprises’ executive incentives and built a theoretical framework by normative study method. We also found that there are some problems of electric power listed companies, such as uneven development of incentives, unreasonable assessment basis, imperfect design of system, the phenomenon of control and alienation etc. Secondly, our paper launched descriptive statistics, correlation test and multiple regression analysis by using relevant data of 45 A-share electric power listed companies during the period of 2010-2013. Empirical study found that executive incentives and executive working consumption are positively correlated with company performance, but the relationship between executive equity incentives and corporate performance is negative. In addition the results demonstrated that corporate governance variables, such as company size and debt to assets ratio, also have some impact on company performance. Empirical results are not entirely consistent with the theoretical hypotheses, showing that executive incentives mechanism of China’s electric power listed companies is unable to fully play its role and needs to be improved. Finally, considering the results of theoretical and empirical analysis, in order to improve corporate performance, we proposed several recommendations including balance the development level of executive incentives, specify performance appraisal standards, promote long-term incentives and strengthen supervision constraints.