The Empirical Study On Correlation Between The Executive Compensation And Performance Of Chinese Listed Commercial Bank Under The Background Of Restricting Compensation

As an important part of finance,banking has a great influence on the health development of national economy and executives have the right of banking management,.According to the modern company management, the executive compensation is an effective way to solve the principal-agent problem,which is caused by the separation of ownership and right of management. For the sake of the global financial crisis,senior executive’s high compensation also gets more attention and query. Whether the compensation of bank’s executive is too high? Whether the executive incentive mechanism is reasonable enough to prevent ethical risk.In face of the query, many countries around the world have token steps to restrict it. For example,Chinese government issued a series of documents to restrain the compensation of bank’s executive in 2009,stipulating that the highest financial executive compensation is 2.8 million yuan and the executive compensation is no more than 90% in 2008 than that in 2007 in state-owned financial institution,which led to a great fall of listed bank’s executive compensation of 2008. In 2014,the document to restrain the compensation of state-owned corporation arouses the argument of executive compensation again.As the government directly decrease the senior payment and reinforces the supervision,the senior payment decreases a little.However,the problems that whether the senior payment is connected with the bank’s performance and whether the compensation incentive mechanism is really effective become the priorities of the banking and financial regulator.Facing the environment of the international banking revolution,banking need to analyze the existing problems of the executive compensation incentive mechanism and then devise an more effective compensation incentive mechanism, which would inspire the bank’s executive to achieve the shareholder’s goal, connect the executive interest with corporate interest closely,and then reduce the principal-agent cost.In this paper, the empirical study on the senior payment and achievement of the Chinese listed banks will offer useful information to the compensation reform of Chinese banking.The paper mainly study the situation of executive compensation incentive after a series of documents,analyze the structure of the executive compensation and describe the change of executive compensation after carrying out the policy of restraining executive compensation. Then,this article summarize existing problems of the executive compensation incentive in China’s listed banks.This paper chooses the panel data of 16 Chinese listed banks between 2008 and 2014 as research samples,making an empirical analysis by using fixed effects model and studying on the relationship between executive compensation and listed banks’performance.The result indicates that senior payment have a positive impact on the bank achievement,which means the compensation incentive is effective in some extent.According to the research,the decision of executive remuneration hasn’t considered the secure factor of operation,which could increase bank’s operational risk.Also,the paper finds that the documents of restricting compensation decrease the sensitivity between banking achievement and manager payment.which is bad for improving the bank’s achievement.According to the result,the paper provide some advice from the aspects of government and bank.There are six parts including in this paper.The specific content of every part is illuminated as follows:The first segment is the introduction of the paper. In the first piace,this section describes the research background, and specific significance of the research.Then it summarizes the main methods and content of the research.At last, it illuminates the innovation and inadequacies of this paper.The second segment is the theoretical basis of this research and other relative research findings domestic and overseas.Firstly, this chapter makes a list of the relevant theories about the stimulation of executive compensation.Then it summarizes the relation of the executive compensation and bank performance by studying the existing research.The third segment is the analysis on the current situation of executive compensation incentive under the background of limiting payment.Firstly, it mainly analyze the change of executive compensation between 2008 and 2014.At the same time, it describes the structure of executive compensation in the listed commercial bank.The fourth segment is empirical analysis. At first,this chapter makes a list of the selection of the source of research data and indicators. Secondly, the section introduces the model used in this paper. Thirdly it make a stationary test to give a preliminary investigation of these data. Then it uses the panel data model to analyses the relation of executive compensation and listed commercial bank performance,and study how the policy of restraining payment influence the sensibility of senior payment and bank performance.At last,it changes a performance variable to make the research conclusions more reliable.The fifth segment are research findings and corresponding recommendations.In the first place, this section gives the summary of the article and current problems of senior payment mechanism.Then the section offers some corresponding recommendations to accelerate the improvement of bank’s executive compensation incentive mechanism.