The Study Of The Executive Pay Performance Sensitivity Of Listed Companies

Performance-based compensation contract ties into the compensation and firm performance, is considered the main mechanisms to solve the agency problem, incentive management in seeking to maximize personal rewards at the same time maximize the value of shareholder wealth. However, as the economic development of our country has entered the new normal, economic growth driven by elements change to innovation-driven, then require companies to constantly increase the intensity of innovation. So, whether the performance-based compensation contract will promote the innovation and development of our company has become an important topic.This paper expounds related concepts and theoretical analysis, adopts listed companies in China from 2007 to 2014 after the new accounting standards implemented as the research sample for empirical research, the purpose is to test the relationship between enterprise innovation and executive Compensation performance sensitivity, further perfect the compensation mechanism and corporate governance structure for promoting the modern enterprise innovation. It is concluded that the research results are as follows: First of all,the executive compensation and corporate performance of listed companies has significantly positive correlation; Second, the enterprise innovation will be weakened the relationship between executive compensation and firm performance sensitivity; Third,further study found that compared to the non-state-owned listed companies, innovation activities on the executive compensation performance sensitivity are the obvious inhibition in our country state-owned listed companies.This article not only enrich the study of executive compensation contract, also widen the research scope of enterprise innovation, to perfect the company’s management for executive compensation contract provides reference, corresponding policies laid the foundation for the country. The main contributions are as follows:First, this paper takes a new perspective-- enterprise innovation to study the relationship between executive compensation and firm performance, existing for executive incentive research mainly focuses on how to incentive executives in routine operationaland financial decision. then, we carry on the empirical research by group, comparing how the innovation influence on executive pay performance sensitivity in the state-owned and non-state-owned listed companies, to put forward the solution targeted and further establish distinct executive compensation contracts to promote innovative. it could be a contribution of this paper;Second, the timeliness of the data. The new accounting standards made a change on accounting treatment about R&D, part will be allowed to be capitalized, and require disclosure in the financial statements. This paper adopts listed companies in China from2007 to 2014 after the new accounting standards implemented as the research sample for empirical research.