Can Non-state Shareholders Achieve Constraints On Executives' Excess Compensation In State-owned Enterprises

The executives'excess compensation has always been a heated topic both in theory and practice.Excess compensation is not a reflection of managers' efforts and is negatively correlated with the performance of the enterprises in the future,which will damage the company value.Similar problems also exist in the SOEs in our country.A large number of existing studies have pointed out that the compensation regulation based on the administrative means has failed to achieve the desired results,which is not an effective way to achieve constraints on executives' excess compensation.Since the third Plenary Session of the 18th CPC Central Committee,the Mixed Ownership Reform has rapidly become one of the central issues of the reform of state-owned enterprises.The role played by non-state-owned shareholders in the corporate governance of SOEs has gradually been attached great importance in theory and practice.But what role do non-state-owned shareholders play in compensation arrangements?Can non-state-owned shareholders achieve constraints on executives'excess compensation in SOEs?For the above questions,there is no uniform research in domestic literature.Based on this background,this paper will try to analyze the function of non-state-owned shareholders on executives' excess compensation in SOEs.This paper collects 4080 sample data of SOEs in the competing industries between the Year 2011 and the Year 2017,and investigates how the non-state-owned shareholders achieve constraints on executives' excess compensation in SOEs from the ownership structure dimension and the board governance dimension.The results show that:(1)The phenomenon of executives'excess compensation has been existing in SOEs;(2)Non-state-owned shareholders' participation in the corporate governance of SOEs can significantly achieve constraints on executives' excess compensation in SOEs.Specifically,non-state-owned shareholders' shareholding ratio is significantly and negatively correlated with the executives' excess compensation of the SOEs while non-state-owned shareholders can also achieve constraints on the executives'excess compensation by appointing directors;(3)this kind of constraints can only exist in the SOEs controlled by local government and the SOE located in the area with high level of marketization;(4)Non-state-owned shareholders' participation in the corporate governance of SOEs can also significantly achieve constraints on executives' luck pay.The findings not only enrich the research achievements related to shareholder governance and compensation arrangements,but also offer some empirical evidence on non-state-owned shareholders' positive functions,which would be helpful for the government to make appropriate policies on the Mixed Ownership Reform.