Research On The Effect Of Changes In Executive Compensation On The Performance Of Listed Companies

At present,China’s economy is in the critical period of transition from "Made in China" to "Created in China".The adjustment of industrial structure and the creation of enterprise value need senior talents to empower,and human capital has become the core element of the development of modern companies.Therefore,signing an effective compensation contract with senior executives has become an important means to attract and retain senior talents,motivate senior executives to work actively and improve corporate performance.In 2014,the Political Bureau of the CPC Central Committee deliberated and approved the Plan for The Reform of the Remuneration System for Heads of Centrally Administered Enterprises.In 2020,THE State-owned Assets Supervision and Administration Commission(SASAC)issued the Guidelines for Implementing Equity Incentive in Listed Companies controlled by Central Enterprises,and a series of policy documents were issued to promote the further establishment and improvement of executive incentive mechanism.However,with the development and implementation of the compensation system,more and more problems emerged.For example,how to adjust salary level and salary structure,whether the increase of salary can effectively promote the improvement of enterprise performance and so on.Based on these problems,combined with the theory and the current situation of executive compensation development,this paper analyzes the impact of executive compensation changes on corporate performance through empirical analysis,and comprehensively and deeply discusses the incentive effect of executive compensation in China.Firstly,this paper sorted out the relevant literatures at home and abroad and reviewed the relevant researches on executive compensation and corporate performance by domestic and foreign scholars.Secondly,based on principal-agent theory,optimal contract theory,equity incentive theory and manager power theory,combined with the development of executive compensation in the past ten years,this paper theoretically analyzes the impact of executive compensation changes on corporate performance.And then to China’s a-share listed companies as the research object,combing the 2010-2020 panel data,using the fixed effect model to changes in executive compensation and corporate performance empirical research,the association between through the study of the heterogeneity of enterprise property rights,the board of directors structure analysis,to explore the influence of executive compensation change on heterogeneous enterprise performance differences,Then verify whether the change of executive compensation can effectively improve the enthusiasm of management to participate in the operation of the company,promote the improvement of corporate performance,provide theoretical support and empirical test to alleviate the principal-agent problem in corporate governance;Finally,based on the empirical results of this paper,relevant policy recommendations are put forward.The conclusions of this paper are as follows: first,based on benchmark regression,it is found that when the executive compensation level changes,monetary compensation and equity incentive changes have a significant positive relationship with corporate performance,and the increase of the two types of compensation will promote the improvement of corporate performance;When the executive compensation structure changes,there is a significant positive correlation between the proportion of equity incentive in the total compensation and corporate performance,that is,in the total compensation of executives,the higher the proportion of equity incentive,the better the corporate performance will be.Second,based on the heterogeneity test of property rights of enterprises,it is found that the increase of monetary compensation level of executives in state-owned enterprises has a stronger effect on improving corporate performance than that of non-state-owned enterprises,while the incentive effect of equity incentive changes is weaker than that of non-state-owned enterprises,but not significant.In terms of salary structure changes,the improvement effect of increasing the proportion of equity incentive in state-owned enterprises is weaker than that of non-state-owned enterprises.Third,based on the power structure of board of directors of heterogeneity inspection,found that when the chairman of the board of directors,general manager of the joining together of two position,monetary compensation changes,changes in equity incentive,executive compensation structure changes of regression coefficient significance are weaker than both separation,only under the 5%level significantly,namely the joining together of two position,changes in executive pay incentive is weak.Finally,based on theoretical analysis,status analysis and empirical test,the following suggestions are put forward: 1.Adjust the compensation decision mechanism and increase the proportion of corporate performance in the compensation decision system;Second,improve the executive compensation structure and encourage executives to hold shares appropriately;Third,set up the power structure of senior executives scientifically to guarantee the independence of supervision mechanism;Fourth,improve the senior management information disclosure mechanism and supervision mechanism.