An Empirical Research On The Relationship Between Executive Monetary Compensation,Stock Ownership Incentive And Corporate Performance Of GEM Listed Companies

As an important method of motivation in the modern corporate governance,Executive pay and stock ownership incentive play an significant role on unifying shareholders and professional manager's interests,short-term objective and long-term objective,and promoting firm competitiveness and performance,even making the company realize sustainable development.In order to fulfill the financing of SME and realize complement with the main board market,the GEM was open in Oct.2009.To attract and retain advanced talents,the GEM listed company begin to implement equity incentives gradually.Specially,CSRC issued the regulation of equity incentives on July 13,2016,which means the support of government in the field of listed company equity incentives.In the past,the research of the relationship between executive compensation,equity incentives and company performance was mainly focused on the relationship between executive compensation and company performance or equity incentives and company performance separately.In consideration of the situation,this paper analysis these variables together,and try to find out which variable influences the company performance more.Also,because of the GEM listed companies are private enterprise in main,which can make the salary system by themselves.Furthermore,the study of GEM listed company is few.This paper decides to use the company's data of 2013-2015 which listed between 2009 and 2012 in GEM,and the research of the relationship between executive compensation,equity incentives and company performance are by the method of empirical analysis.First of all,the paper reviews the latest research of the relationship between executive compensation,equity incentives and company performance,and then define the concept of executive compensation,equity incentives and company performance.On the basis of principal-agent theory and human capital theory,which related to executive compensation and equity incentives,and theory related to company performance,the paper raises presumptions.Secondly,the paper raises presumptions about the relationships between executive compensation,equity incentives and company performance separately.In consideration of the reality of GME,the study uses Tobin Q as explained variable and uses salary,stock value and the strength of equity incentives as explaining variables.At last,in consideration of other factors which can influent company performance,the study use Debt-to-assets ratio,top 5 equity of stock holdings,institution equity of stock holdings,asset size and increase rate of business revenue as control variable.The results show that executive compensation and company performance are positive correlated,equity incentives and company performance are positive correlated,the strength of equity incentives and company performance are also positive correlated,institution equity of stock holdings and increase rate of business revenue are negative with company performance,Debt-to-assets and ratio asset size are negative with company performance too.On the basis of conclusions,the paper comes up with some suggestions about how to enhance the effect of executive compensation and equity incentives:design a scientific and reasonable salary system,establish a system that combine executive compensation with equity incentives,strengthen corporate governance furthermore,improve the related law about equity incentives,regulators perform their duties practically.