Research On The Impact Of Executive Compensation In China's Real Estate Industry On Corporate Performance

Whether executive compensation can play an incentive effect to promote corporate performance has always been a hot issue in academia and even in practice.Modern enterprise system is a positive result of continuous exploration in the development of market economy.Separation of two powers is the basic feature of modern enterprises.Under the system of separation of powers,managers,as principal agents,exercise the functions and powers of enterprise management,which leads to the problem of executive incentives.In addition,the asymmetry of information and the inconsistency of objectives between owners and managers result in the principal-agent conflict.The integration and penetration of the world economy lead to the competition among enterprises more and more fierce.In fact,the competition among enterprises is among enterprise talents,especially among enterprise executives,whose own human capital brings unparalleled operational benefits to enterprises that is incomparable with material assets bring.How to design an effective salary incentive mechanism,attract and retain talents and ensure that their decision-making behavior is in the direction of maximizing the performance of enterprises,it is an important task of enterprises.The financial crisis broke out in 2008,which led to the decline of business performance and even the risk of bankruptcy of many companies.However,the survey shows that the executive compensation of such enterprises has not decreased but risen.The relationship between executive compensation and corporate performance has once again attracted wide attention from both theoretical and practical circles.As a pillar industry in China,the real estate industry has been on the list of high executive compensation in recent years.The contradiction between executive compensation and corporate performance is very prominent.Therefore,this paper chooses the real estate industry as the research object of the relationship between executive compensation and corporate performance.Research on the relationship between executive compensation and corporate performance has yielded fruitful results in theoretical circles.The conclusion is that there arc roughly the following relationships between executive compensation and corporate performance:irrelevant,weak correlation,significant positive correlation.The existing literature on the relationship between equity and corporate performance mainly from two perspectives,respectively is the "trench defense effect" and "benefit synergy effect".The former refers to the large shareholders holding a high proportion of shares and their power is difficult to be checked and balanced.In order to seek private interests,they will support the management decisions made by senior managers,resulting in conspiracy actions that damage the interests of small and medium shareholders or even hollow out the enterprise.The latter refers to the large shareholders holding a high proportion of shares,because they enjoy residual claim of enterprise value,their interests are determined by the overall interests of the enterprise and for their own interests.It will reduce the damage to the interests of small and medium-sized shareholders and the interests of the company,and supervise the executives to achieve the goal of maximizing corporate performance.As an important part of the ownership structure,equity checks and balances will affect the power in the hands of major shareholders,and then affect the business decisions of executives.There are three kinds of relationships between equity checks and balances and firm performance:positive correlation,negative correlation and U-shaped relationship.However,few existing literature use equity checks and balances as a moderator variable to explore the relationship between executive compensation and firm performance.Based on the principal-agent theory,incentive theory,and corporate governance theory,chooses real estate listed companies in China as the research object,based on their panel data from 2010 to 2017,and then uses stata14.0 measurement software to analyze the data,and explores the mechanism of executive compensation affecting business performance from the theoretical and empirical perspectives,and regards equity checks and balances as the basis.Regulatory variables are included in the analysis framework of the impact of executive compensation on corporate performance.Empirical results show that:1.Executive compensation and corporate performance change in the same direction,there is a significant positive correlation between the two,that is.the increase of executive compensation will promote the improvement of corporate performance;2.Equity checks and balances play a negative regulatory role between executive compensation and corporate performance.The addition of equity checks and balances will weaken the controlling power of large shareholders and reduce their collusion with senior managers.The mutual restraint between shareholders will reduce the efficiency of internal operation of enterprises,which is not conducive to the improvement of enterprise performance.3.Control variables and firm performance.The results show that except for the negative correlation between asset-liability ratio and corporate performance,growth capacity,operating capacity,ownership concentration,board size and corporate performance are all positively correlated.Finally,according to the conclusions of the study,the following suggestions are put forward:1.Optimizing the executive compensation system and improving the performance evaluation mechanism;2.Strengthening salary supervision and enhancing the disclosure of salary information;3.Perfecting the corporate governance mechanism and improving the efficiency of enterprise management;4.Strengthening the external supervision system and improving the manager talent market.