The Relationship Of Institutional Investors, Executive Incentive And Company Performance

Resolving the agency cost of managers by effective corporate governance means and achieving the effect of promoting the company's performance improvement is a hot topic of many research scholars. In order to effectively relieve manage defense behavior of senior management, resolve conflicts between the owners and managers and "internal control" issues, the company requires an effective mechanism for correction, which is the internal governance mechanisms of executive incentive and the external governance mechanisms of institutional investors. On the one hand, institutional investors, as the third vital force of the stock market, whose existence can solve the problem of individual investors, have the advantage of scale, professional, information, etc; On the other hand, the senior management as the core capital, can co-ordinate various important resources to achieve the company's strategic objectives. Executive incentive relates to the performance of listed companies achieved. Moreover, actively involving in the development of executive incentive is also an important part of institutional investors in corporate governance. Based on the above analysis, this paper studies the relationship between institutional investors and executive incentive and corporate performances. And also studies the relationship between executive pay and corporate performance incentive for further research under the influence of institutional investors.This paper takes 2010-2013 Shanghai and Shenzhen A-share listed companies as samples, combines with current research, forming a regression model on the theoretical basis of the relevant institutional investors and executive incentive, studies the relationship of institutional investors, executive incentive and corporate performance by the multiple regression analysis. The results show that the proportion of institutional investors and corporate performance show a significant positive correlation; executive compensation and executive ownership belong to effective incentives of senior management, and empirical results show that both executives are on the corporate performance incentives have a positive role in promoting. In the role of institutional investors, the relationship between executive compensation and corporate performance incentives is a significant positive correlation, which means that as institutional investors participate in governance, institutional investors develop directly the plan of executive compensation incentive, and produce a positive impact on company performance.External governance mechanisms of institutional investors and internal governance mechanisms of executive incentive and can effectively solve the problem of agents; reduce agency costs, thus contributing to improve the company's performance. Therefore, It can improve corporate governance and enhance corporate performance that strengthening the construction of institutional investors, the relaxation of restrictions on them; developing a reasonable salary level, adjusting the salary structure; appropriately increasing in the proportion of shareholding of executives, adjusting the ownership structure, encouraging institutional investors to comprehensive participate in the governance, especially concerning executives incentives.