Empirical Analysis Of Executive Compensation And Firm Risk In Companies Listed On GEM

Senior managers are the core part of the human resources.Reasonable compensation system plays a critical role in retaining senior managers and reducing companies' risks especially the financial risk.Compared with other boards in the securities market,Growth Enterprise Market(GEM)is a platform that has lower registered entry capital barriers and more strict supervisions.Several hi-tech companies are inclined to access to this market.Since the year of 2010,the relationship between risk controlling and executive compensation has gained great attention.This study is further sub-divided executive compensation into explicit compensation and implicit duty consumption.By analyzing relations among monetary compensation,firm risk,and duty consumption,this paper is expected to offer help for the construction of executive compensation system and the improvement of corporate governance.This paper analyzed a sample of 187 companies listed on GEM in the period of 2012-2015.In the research method,firstly,this study used descriptive method to analyze variables including explicit compensation,duty consumption,company risk and control variables.Secondly,this paper used correlation analysis and panel data analysis to test the relationship among those variables.The conclusions are as follows: firm risk is positively correlated to senior's explicit compensation,duty consumption,firm size and liquidity ratio;explicit monetary compensation is positively related to duty consumption;there is an adverse relation between firm risk and owner's equity;firm risk has no relationship with asset-debt ratio,companies' growth and ownership concentration.For those findings,this paper gives three suggestions: perfect the disclosure of senior compensation and make senior managers' duty consumption explicit;diversify the structure of executive compensation and give full play to long-term incentives;reasonably control the risk on growth enterprises.