Research On The Management Compensation Structure,excess Pay And Enterprise Value

In essence,modern enterprises are the property rights contract connectors formed by stakeholders.Under the condition of the separation of operation right and ownership of the company,the two-tier principal-agent relationship between shareholders and management as well as shareholders and creditors formed gradually.The principal-agent problem in the enterprise greatly influence the management decision-making and value creation process.The company management can significantly enhance its enterprise value by exerting its own entrepreneurial human capital.However,its behavior may deviate from the goal of the enterprise value maximization because of its tendency to pursue its own motivations,such as pursuing higher compensation,establishing an enterprise empire,excessively perquisite consumption and so on.Therefore,how to establish a mechanism of incentive and restraint for improving the correlation between executive compensation and enterprise value is becoming a hot spot for domestic and foreign scholars to research,this study has important theoretical value.Based on the summary of the latest research results about the executive compensation and the value of the company at home and abroad,using the method of combining normative research and empirical test,we examine the correlation between executive compensation and corporate value from a new perspective of excess compensation at the listed companies in China.This paper first introduces the concept of listed companies and corporate governance,management and executive compensation,and the relative concepts of enterprise value,and analyzes the theoretical basis such as the labor supply and demand theory,principal-agent theory,incentive theory,the optimal contract theory,and the theory of residual claim;Secondly,from the three dimensions of corporate governance,executive characteristics and company characteristics,the related factors affecting management compensation are analyzed theoretically,and using panel data of listed companies in our country has carried on the empirical research,thus establish the foundations for the later measurement on excessive pay;Thirdly,this paper,based on executive compensation,carried out a research including three parts,respectively are the relevance between monetary compensation and enterprise value,equity compensation and enterprise value,and the total management compensation and the enterprise value.In the study of each part and the specific compensation is divided into basic pay and excess pay,respectively from the perspectives of theory and empirical analysis to investigate the relation between the compensation and enterprise value;Finally,we draw the research conclusion of this article.In this paper,we show that the excess compensation of listed company executives in our country support the optimal contract theory,which is the embodiment of the value of human capital of executives.We found no management extract rent to encroach on corporate interests,to a certain extent,management compensation alleviate the agency problem.However,the correlation between monetary compensation,equity compensation and enterprise value is also different due to the difference in the index selection of enterprise value.In general,if choose accounting measure(ROA),and correlation are positive,but if we choose market indicators(Tobin 's Q),the corresponding relationship between basic salary change,this shows from one angle of view that accounting data which reflect the assets of the enterprise value and capital market pricing is not completely consistent in our country,this needs us to improve the quality of financial reporting information to improve their decision-making relevance on the one hand,on the other hand,we need strengthen the supervision of the capital market and improve its asset pricing efficiency.We suggest that executive compensation incentive mechanism alleviate the principal-agent problems in the process of value creation in the listed companies of our country,and we need to give higher monetary compensation to motivate management,at the same time we should pay attention to equity incentive compensation,to make it really generate the effect of incentive.In addition,establishing and improving the professional manager market,perfecting the capital market,and improving the information disclosure system about management compensation also can help enterprise management decision-making more scientific,better reflect the enterprise value creation function.The innovation of this paper is: First,It draws on the latest research abroad and differentiate pay between basic and excessive pay.The correlation between its market value(Tb 'q)and accounting index value(ROA)is studied respectively and this expand the research field of executive compensation;Second,Based on the large sample panel data,through F test and hausmann test,It is found that the individual effect of executive compensation of listed companies in China is not significant and the time effect is significant,then the time fixed effect model of the correlation between management compensation and enterprise value is constructed.Third,The residual error of regression model of compensation influence factors is used as the statistical measurement of excess compensation in examining the correlation between executive excess compensation and enterprise value to test the problem of agency and efficient contracting between shareholders and management of listed companies in China,this innovates the empirical method to study the incentive and restraint mechanism of shareholders and management.Fourth,Through the value correlation test of basic pay and excess compensation,we find that the executive compensation system is an effective corporate governance mechanism which is In accord with Effective contract theory,excess compensation is the payment of high executive ability,This is different from the agency conclusion of domestic scholars,That is,the high salary of management is a grab for the rent of listed companies.