The Impact Of Unusual Salary On The Firm Performance

As the constitutor and promoter of strategic decision-making in a company,senior manager has affected the future development of company.In order to achieve the expectant operation target,the shareholder will put the salary of senior manager and firm performance into together to better development and good business performance of the company.While in some listed companies,the salary of senior manager has increased rapidly but uncoordinated with the growth of firm performance during senior manager's term of office.The annual salary with sky-high price has emerged in endlessly which showed the abnormal salary of the senior manager.It has reduced the creativity and positivity of the senior manager in company management.Meanwhile,in order to draw water to their own mill,the enterprises benefits and the firm performance have been reduced.But the board of directors and other regulators can't control the salary planning of the senior manager totally and restrict the power of senior manager to reduce the unusual salary of the senior manager.Therefore,there are closely connection between the power and the unusual salary of the senior manager.It is very necessary to study the relationship between unusual salary of the senior manager in China and firm performance from the point of the power of senior manager.This research can provide the theoretical foundation for reasonable salary management and firm performance improvement of the listed companies in China.This article firstly reviews the theoretical basis of the senior manager salary,the theories of management's power and the relationship between senior manager power,senior manager salary and firm performance from the study of scholars at home and abroad.Secondly,based on the annual reports of a share listed companies of stock markets of Shanghai and Shenzhen from 2010 to 2014,this article classifies and computes the data,Besides we screen the number of the firm with unusual salary as sample andresearches the relationship between the unusual salaryand the firm performance from the point of expansion or not of the senior manager power.Unusual salary is viewed as independent variable,firm performance is viewed as dependent variable.Finally,the research findings:(1)In the firm with unusual salary,the firm performance decreased with the unusual salary of the senior manager increased.(2)The inhibiting effect of unusual executive compensation to firm performance is greater than the companies with normal power of senior manager.At last,this article puts forward the related advice on the basic of research conclusions:(1)strengthen the salary administration and supervision of senior manager;(2)form the well-established system of restriction of powers by better control of the power of senior manager.