Research On Equity Agency Cost From The Perspective Of Executive Compensation

Listed companies are the pillars of our national economy and play a vital role in the development of our national economy.As the listed company is a public company,it has large scale;its ownership belongs to all shareholders,and the company's daily business given to the professional managers,the separation of ownership and management lead to the emergence of Equity agency problems.The agency conflict between the agent and the principal has an important influence on the production and operation of the company and will affect the promotion of the value of company.As the agent of the company,the management is entrusted by the stakeholders and creditors to manage the daily affairs of the company,its decisions and behavioral will have an important impact on the interests of the company and shareholders.Executive compensation incentive is regarded as an important means to mitigate agency conflicts,establish a reasonable compensation system can effectively alleviate the agency conflicts,and then enhance the value of the company.Thus,this paper makes an empirical study on Equity agency cost from the perspective of executive compensation,from the perspective of cash compensation,compensation gap,executive stock ownership and executive compensation structure,to study on the mechanism of executive compensation incentive to mitigate agency conflicts,and make an empirical test on the basis of theoretical analysis,hope to provide some suggestions about how to effectively mitigate agency conflicts,and reduce the company's Equity agency costs,from the perspective of executive compensation incentive,this paper also puts forward some suggestions on how to improve the executive compensation system of listed companies.This paper selects the data of listed companies for three consecutive years between 2013 and 2015,make an empirical study on Equity agency cost from the perspective of executive compensation.Firstly,this paper reviews the domestic and foreign literature on agency costs,executive compensation and corporate performance;put forward the research hypothesis based on the analysis of relevant basic theories.Secondly,according to the research topic of this paper,we select the relevant variables and assign four research models.Then download the relevant sample data from CSMAR and CCER,use EXCELL and SPSS22 software for data processing,excluding outliers and data of the Sample Firms,a total of 6276 observations were obtained.Finally,through the empirical analysis method,by using the research model of this paper,draw the conclusion.This paper integrally uses principal-agent theory,asymmetric information theory,tournament theory,fairness preference theory and managerial compensation theory for theory analysis.Based on the perspective of executive compensation,this paper makes an empirical study on the Equity agent cost of the company,research conclusion as follows:(1)Executives cash remuneration and the company's agent costs were first dropped after the rise of the U-type relationship,improve cash remuneration can effectively encourage the management of the company to ease the agency conflict,but too high cash pay not only cannot reduce the company agent costs,it will increase the cost of Equity agency,so listed companies in the development of pay system should consider the reasonable range of cash pay,too high or too low cash remuneration is not conducive to the senior management incentives.(2)The executive pay gap and the Equity agency cost of the company show a non-linear relationship.Appropriate increase in the level of salary between different levels of executives can have an effective incentive to the management,so that agency conflicts can be mitigated,but it should also be noted that the gap between the different levels of executives should not be too large,the executive compensation system should not only consider the incentive effect of the salary gap,but also take into account the fairness,improve the enthusiasm of senior executives and enhance the cohesion of the executive group.(3)There was a significant negative correlation between executive compensation and Equity agency cost.The executive team has a certain shareholding ratio,can promote the interests consistency of executives and shareholders,so that the company's management is not only concerned about the company's short-term profitability,more concerned about the long-term development of the company.(4)The ratio of executive compensation and cash compensation is negatively related to the agency cost.In the relatively stable cash compensation level,improve the ratio of equity compensation for cash compensation,can promote the convergence of management with the interests of the company,and motivate managers to work hard,and then ease the agency conflict,reduce Equity agency cost.Therefore,in the establishment of pay system,we should pay attention to the proportion of executive compensation,especially pay more attention to the long-term incentive of senior management,can better mitigate the agency conflict and reduce the cost of Equity agency,increasing the value of the company.