Research On The Impact Of Executive Compensation On Corporate Performance Of Listed Companies In China

Financial crisis is already out of our economic system,but the influence of the financial crisis brings to the enterprise and is long-term and profound enlightenment,especially on the influence on executive pay,the financial tsunami has prompted many enterprises at home and abroad to reduce executive pay,once the "cut" the cause of domestic and foreign scholars on executive pay is discussed and explored.Since then,scholars at home and abroad have carried out research on the formulation of executive compensation and the relationship between executive compensation and corporate performanceIn the era of new economy,domestic enterprises are faced with the challenge of global integration,and traditional enterprises begin to transform into knowledge-based enterprises.The construction of talent team is the key factor of knowledge-based economy,and talent is the source of exporting knowledge and transforming it into productivity.The senior management agents with professional knowledge derived from the specialized division of labor in modern society are the senior management personnel in this paper.Undoubtedly,they are the human capital for enterprises to improve production efficiency and increase shareholders’ income.However,it cannot be ignored that in modern enterprise management theory,principal-agent problem always exists,that is,there are inconsistent utility functions and interest objectives between the principal entrusted by the owner of the enterprise and the senior management authorized by the principal to manage the enterprise.In other words,senior executives may damage the interests of enterprise owners for their own private interests,which is the existence of moral wind direction and adverse selection behavior.Therefore,it is of great significance to study the relationship between executive compensation and corporate performance and to link executive compensation with corporate performance to reduce principal-agent costs.Therefore,it is of great significance to study how executive compensation affects corporate performance and its influence path in this paper.This paper discusses and reviews the foreign and domestic researches on the correlation of corporate performance and the factors affecting executive compensation,and finds that there are still incomplete researches in domestic and foreign literatures and shortcomings in the mechanism of executive compensation affecting corporate performance.Taking this as a starting point,on the basis of summarizing corporate performance,incentive theory,executive compensation and other theories,this paper analyzes the mechanism of executive compensation affecting corporate performance in detail,and enriches the mechanism theory of executive compensation affecting corporate performance,including executive currency mechanism,executive shareholding mechanism,and salary gap mechanism.In each mechanism,the path of executive compensation affecting firm performance is detailed,and on this basis,the research hypothesis is drawn.In order to test the research hypothesis,the relevant data of China’s listed companies in the past decade are samples,and Stata software is used for analysis.In the empirical process,after adding relevant control variables of governance,shareholder and financial levels,This paper studies the effects of executive monetary compensation(Pay)and executive stock ownership(MH)on earnings per share,return on total assets and return on equity(ROE),the core explanatory variables of executive compensation.On the basis of regression,robustness test,endogeneity analysis and consistency analysis are carried out to ensure that regression conforms to the classical linear hypothesis and the reliability of regression results.The benchmark regression results show that both executive monetary compensation and executive stock ownership have a positive incentive effect on corporate performance.After the endogeneity problem is dealt with,the estimation results based on instrumental variables prove the authenticity of the impact of executive compensation on corporate performance.By changing the measurement method of independent variable,the measurement method of dependent variable,the clustering robust standard error,adding the interaction term of control variable and time linear trend in the baseline regression,and adding the independent variable and the leading term of control variable to do the robustness test,the research results were obtained to be robust.Through property right nature,nature of the divisions,points,analysis of the heterogeneity,marketization of state-owned holding enterprise executive pay to corporate performance promotion effect is stronger,the influence of executive pay to corporate performance does not have the heterogeneity,the higher level of market door industry,the enterprise executive pay to corporate performance positive motivation,the more obvious.At the end of this paper,research conclusions and policy recommendations are given.After a series of empirical tests,it is concluded that executive compensation of listed companies has a positive incentive effect on corporate performance.In terms of policy suggestions,In order to reduce principal-agent cost and prevent executives from moral direction and adverse selection behavior,listed companies should implement equity incentive plan and establish and perfect equity incentive mechanism.According to the championship theory,the salary gap will motivate executives to work harder,so differentiated executive compensation level should be established.Heterogeneity test results show that the nature of property rights and marketization level both have an impact on the effect of executive compensation on corporate performance.Therefore,enterprises should combine internal and external environments when formulating compensation incentive mechanism.From the perspective of regulators,the market economy should be stabilized,and a strict executive compensation supervision system should be established to make information disclosure transparent.