The Empirical Study On The Incentive Effects Of Executive Compensation In Listed Banks Of China

In recent years,the "high price" of listed bank executives has become one of the most topics discussed in all walks of life,especially it is obvious that economic downturn and the bank's poor performance in current situation,the PAY of bank executive is still high.In January and April2009,The Ministry of Finance announced two regulations of " PAY ceiling order ",The new regulations also led to some of questions,for example,could " PAY ceiling order " combat the enthusiasm of executives of listed banks? Could executive compensation of listed banks have an significantly positive effect on the performance of banks under the background of "PAY ceiling order" ?This paper will analyze the effect of executive compensation incentive of listed banks under the " PAY ceiling order " background from the theory and empirical perspective.At the end of this paper,we puts forward some policy recommendations.In this paper,we consider the relationship between executive Compensation and performance of listed banks in China from the endogenous perspective,the main contribution of our research is utilizing “ PAY ceiling order ” as an instrumental variable to tackle the endogenous problom.Considering the high risk of banks,we use RAROC as the bank's performance variables,we choose the a-share listed 16 commercial banks data in 2006-2015 as the research sample,through the double-fixed-effect model regression analysis,we find that the " PAY ceiling order " significantly reduced the level of executive compensation;the change in total PAY for executive increases one million per year with a slight 4.33% increase in return on RAROC.In addition,we also finds that executives shareholding has significantly positive effect on bank's performance,Board of Supervisors shareholding has higher significantly negative effect on bank's performance.