Research On The Correlation Between Political Correlation And Executive Compensation And Enterprise Performance

As a socialist country,the influence of the government spreads over many aspects of economic production,and the government has a large amount of economic resources.Political correlations usually refer to a relationship established by a company’s executives with the government by a past or present appointment in the government,or as a member of the National People’s Congress and the CPPCC.In recent years,the phenomenon of high-paying executives of listed companies in China is very common.As a kind of pricing and incentive measures for entrepreneurs,executive compensation is related to many factors,including the company’s operating conditions and corporate governance.The political correlation in listed company executives is also a relatively common phenomenon.Many executives have political status in addition to company operators.Whether the political identity of executives affects their level of compensation,and what kind of impact this relationship has on business performance is a question worth exploring.This paper select the A-share listed real estate companies in China as a sample,and divides them into state-owned and non-state-owned according to the ownership system.The corresponding theoretical analysis and empirical analysis have been carried out.It is found that among the state-owned enterprises and non-state-owned enterprises,the executives’ compensation levels of politically related companies are significantly higher,and political correlation is a factor that affects their salary levels.Then,whether the political correlation can promote the improvement of business performance,the empirical test shows that the political correlation in the state-owned enterprises can effectively improve the performance of the business,while in the non-state-owned enterprises,the political correlation fails to promote the improvement of the company’s business performance.The company’s excessive salary due to the political correlation of executives is an unreasonable pricing behavior.The research in this paper will help to further explore the influencing factors of executive compensation,and provide a realistic basis for correctly handling the relationship between government and enterprises and market economy reform.