The Study Of CEO-shareholder Incentive Alignment In China Listed Companies

The relationship between CEO compensation and firm performance is attracting more and more attentions in the academic circle and practical management field, the main reason is that there’s no unified conclusion for this topic. And as executives have increasingly received equity ownership, CEOs presumably care about the value of equity holdings. In recent years, difference exists in the comprehending of CEO’s new role between China and foreign countries.The study based on the new perspective of taking CEOs as shareholders but not just top-management employees, investigates the listed companies in China. And it specifically studies: First, the relationship between CEO return and shareholder return. Second, the impact of financial alignment on future firm performance. Third, the comparison of relationships between 3 future firm performance measures and financial alignment, they are respectively future shareholder return, future firm earnings and future EPS. Forth, the moderate effect of CEO total firm-specific wealth and CEO return/shareholder return dollar ratio on the relationship between financial alignment and future firm performance.After theoretical analysis and empirical research, the result shows that: First, financial alignment exists in companies of China. Second, there’s no positive relationship between financial alignment and future shareholder return. Third, a positive relationship exists between financial alignment and future EPS. Forth, there’s a significant relationship between CEO total firm-specific wealth and future firm performance. Fifth, both of CEO total firm-specific wealth and CEO return/shareholder return dollar ratio have no moderate effect on the relationship between financial alignment and future firm performance.In the end of this paper, the author presents the limitations of this study and several issues that need to be further studied.