The Research On Management Incentives Of Listed Company In China

The prominent feature of modern publicly-owned corporation is separation of ownership and management, giving rise to principal-agent relationship. It is a centerpiece of corporate governance study how to improve producing and management efficiency and reduce agency cost in competitive markets, only to maximize profit or shareholder wealth. Practical evidences show that giving incentive to management is an effective measure to eliminate or reduce agency cost. This article is a study on executive compensation in china's listed company based upon framework of principal-agent theory.This paper sets out to analyze executive compensation patterns, factors and models, after reviewing on relevant theories. It also discuss about corporate performance, the base and aim of providing compensation. Then it step further to make an empirical study on executive compensation in china listed company, many results are presented, based on which we explore an improved model of executive compensation consistent with china econometric specifications.Executive compensation has attracted much attention from domestic economists yet no same conclusions are drawn. While making theoretical analysis and model studying, we provide empirical evidence on relation of executive pay-performance using data on china listed companies from 1998 to 2004. Main conclusions are: that executive monetary compensation increase at much larger rapidity than that of firm performance improvement; that management tend to improve performance measures closely related to their private income and ignore firm's long-term development; that keeping authority stable may help improve performance and alter of authority has a negative effect, but chairman of the board and CEO's inner promotion or deployment from outside may impose influence in different direction and extent. We also make empirical study on factors determining executive compensation structure, which include ownership characteristic, proportions of non-tradable share holders of different types, management structure, industry, size of firm and it's performance.After analyze theoretically and empirically executive compensation problems in china's listed company, this paper further to develop an approach to improving executive compensation structure. Our principle is to reduce interest conflict of shareholders and management, and to make a stronger positive link between management individual contribution and their effect on performance, forming a benign circulation. The improvement is undertaken both on technique layer and on system layer: the former aims to make compensation structure more scientific and more rational, includes building up rational corporate governance evaluation system,...