Research On The Executive Pay System Monopoly Industries And Enterprises

Recent years, the executive pay has always been a concerned and controversial topic, especially the imbalance of the executive pay between monopoly and non-monopoly industries, which makes the rationality and legitimacy of the enterprise executive pay in monopoly industries widely questioned. Taken the enterprise executive pay of monopoly industries in our country as the main research subject, this thesis is to research the impact variables of the executive pay in monopoly industries and whether the executives make the payment by themselves, in order to provide enough experience to perfect the incentive mechanism of executive pay of monopoly industries in our country, through designing several variables, such as the executive pay, adopting the thought of "monopoly-executive behavior-corporate performance-executive payment-executive behavior" and comprehensively conducting the applicability of the principal-agent theory and the power theory of the management.Five parts are mainly discussed in the thesis. The first part is to study the influencing factors of the enterprise executive pay in monopoly industries by establishing the logical starting point of the analysis of the system of the enterprise executive pay in monopoly industries and revealing the intrinsic relationship between executive payment with the enterprise performance, corporate governance mechanism, corporate basic characteristics, executive control, and contingency factors, to provide the basis to the theory construction of the system of the corporate executive pay in monopoly industries. The second part is about the theoretical study of the corporate executive pay in monopoly industries. Monopoly advantage, the capacity level of the agent and the degree of the agent’s effort are directly introduced into the model by using Cobb-Douglas production function. Conclusions have been drawn that the monopolistic advantages amplifies agents’efforts; the monopoly advantages and the capacity level of the agent had a positive influence on the principal-agent effect; the degree of agent’s risk aversion impacts the excitation intensity negatively; the interference of the external environment impacts the achievements of the agents. The third part is to define the measuring index of the corporate executive pay in monopoly industries. The corporate executive pay in monopoly industries is divided into two categories of dominant and recessive salary and is classified specifically into four parts including short-term incentives, long-term incentives, the power’s payment and renting payment in monopoly. The internal and external factors play a role in the pay incentives together, such as the degree of competition in the industry, the basic characteristics of the enterprise and the corporate governance mechanisms. The degree of competition in the industry also affects the basic characteristics and the corporate governance mechanism. The fourth part is about the empirical research of the corporate executive pay in monopoly industries. Taken the observed values of699enterprises in monopoly industries and4,494enterprises in non-monopoly industries from2003to2010as the sample, the relevant theoretical assumptions are put forward to make a detailed research on the problems of the corporate executive pay in monopoly industries through making use of panel data model to set up the empirical test model of the analysis of the corporate executive pay in monopoly industries. The fifth aspect was to perfect the policy proposals of the corporate executive pay in monopoly industries. They are as follows. It is important to make sure the influencing factors of the system of the corporate executive pay in the monopoly industries. It should establish a scientific appraisal system of the enterprise performance and evaluate the enterprise performance objectively and justly. It can expand executive excitation channels and lead into diversified and multi-level motivational tool. It should restrict the power of the executives and regulate the internal support of the corporate executive pay in monopoly industries. It can introduce competition moderately, process unreasonable executive pay differences and reduce the Industries’income gap-Here are the main conclusions of the thesis. First, in the "executive behavior-corporate performance-executive compensation-executive behavior" dynamic and closed loop system, the monopoly advantage exaggerates the efforts of the corporate executive pay in the monopoly industries. The high output of the enterprise is more likely the result of efforts by the "good luck" rather than agents. Especially in the case of insufficient cash flow and higher asset-liability ratio, it is unreasonable to maintain a high level of the executive pay all the time. Second, though the long-term incentives in the operational efficiency and the pay structure of the enterprises in monopoly industries is significantly weaker than the group of the non-monopoly industries, the main performance of the corporate executive pay between monopoly and non-monopoly industries is that the executive of the enterprise in monopoly industries had a high and stable pay, especially the job consumption is very obvious; The higher monopoly rents pay is widespread and its main source is from the monopoly profits of the enterprise; The executives in monopoly industries have high and stable management powers. They prefer using the power to manipulating accounting in order to gain a higher performance pay and access to the job consumption and other recessive remuneration. Moreover, the addition of the job consumption does not affect the reduction of monetary remuneration. However, the non-monopoly industries prefer for monetary remuneration; a executive in monopoly industry not only enjoys a higher monetary remuneration than the non-monopoly industry group, but also increase the more subtle recessive remuneration-job consumption by opening out the weights of the performance pay and the scale of remuneration. Third, the power rent-seeking behavior lead to their pay was heterogeneity. Our country’s executive pay in monopoly industries has walked into an "inchworm" effect of the cycle. On the one hand, it expresses as the rigid characteristics that the monetary remuneration can only go up but can not down. On the other hand, the asymmetry of job consumption and monopoly rents pay has increased.The innovations of this thesis are four points. Firstly, it builds a theoretical model of the system of the corporate executive pay in our country’s monopoly industries. On the one hand, it cites the monopoly advantage, the level of the agent’s ability and the level of the agent’s effort into Cobb-Douglas production function, and builds a general principal-agent model of the system of the corporate executive pay in our country’s monopoly industries; On the other hand, when taking into account the reality, agents were often faced with multiple tasks. So the principal-agent model was further expanded, and the pay incentives in the multi-task agency relationship are optimized. Secondly, it establishes the measurement index system of the corporate executive pay in our country’s monopoly industries. In accordance with the corporate executive pay in our country’s monopoly industries, it establishes the applicable measurement index of the corporate executive pay, including monetary remuneration, long-term remuneration, the remuneration of power and monopoly rents pay. Due to the power remuneration and monopoly rents pay are difficult to measure, and this literature of the empirical research is less currently. So this paper has a breakthrough in this regard. Thirdly, it puts forward the proposed policy recommendations to improve the system of the corporate executive pay in the monopoly industries. It includes determining the Influencing factors of the system of the corporate executive pay in our country’s monopoly industries reasonably, establishing a scientific appraisal system of the enterprise performance, constraining executive powers, and optimizing the internal support of the system of the corporate executive pay in monopoly industries.