Research On The Correlation Between Executive Compensation And Corporate Social Responsibility Of Listed Companies

Forty years ago,China's reform and opening-up policy gave the economic development wings to take off.The economy has achieved great success.In 2014,the total GDP exceeded Japan and became the second largest economy in the world.However,the contradiction between economic development and social development is becoming increasingly prominent,and the contradiction between the interests of enterprises and social interests is becoming increasingly prominent,corporate social responsibility issues surfaced.China's economic development has achieved perfect turningover,with the successful implementation of the series of big change and big leap.Contrast with the rapid progressin China's economic development,the issue of corporate social responsibility(CSR)has been paid more and more attention,such as the lack of social integrity,lack of social common values,especially the severely damaged ecological environment and so on.The lack of CSR is intensely criticized by the people,for example,in disregard of the interests of consumers but on the production,the working condition of the neglect of the labor contract law of the violation of cooperative partners,malicious arrears,confirmed the case of the absence of CSR from time to time.The implementation of CSR to employees,customers,the community environment and other related major stakeholders has gradually become the evaluation criterion of enterprises.Therefore,the public begin to suspect the social fairness and justice,due to the lack of CSR.This kind of enterprises should be responsible for the adverse consequences resulted from the production and operation activities while its implementation of economic interests,entirely beared the social responsibility.When the public come across the social ills due to lack of social responsibility,everyone usually attribute the social unfair income distribution into the issue of social responsibility.Especially when the media discloses that some executives from listed companies are still much rewarded while performance of the company declines,the issue of CSR once again becomes a hot topic.This brings us to think: executives of the "sky-high" pay will affect corporate social responsibility? Is there any relationship between the absence of social responsibility and the high salary of executives in the context of rapid economic development? On the other hand,the implementation of CSR can be ensured by its corporate executive's decisions and operations related to the corporate,and as the trustees of the enterprise have to make the decision between "selfish" with "altruistic" in the modern corporate governance system which separates ownership rights from management rights.Corporate executives cannot avoid the selection: to undertake much CSR,or tend to be more self motivation,or how to maintain a proper balance between the executive incentive and the fulfillment of social responsibility to the different stakeholders,i.e.the question of "selfish" and "altruistic".Based on the above background,after reviewing the relevant research literature of these topics and combing the theories relate to executive compensation and corporate social responsibility,this paper mainly focuses on the problem of the impact of executive compensation on CSR and its mechanism behind.Based on the above background,with a comprehensive way of theoretical research and empirical analysis,this paper reviews the relevant research literature,focusing on the mechanism behind the correlation between executive compensation and corporate social responsibility,combing with corporate executive pay and corporate social responsibility and other related theories.The main achievements of this paper are reflected in the following three aspects.First of all,this paper preliminarily analyzes the correlation between executive compensation and corporate social responsibility.Based on the principal-agent theory and the stakeholder theory to put forward over investment hypothesis and coordinating the conflict of interest hypothesis respectively,the empirical test shows that there has a negative correlation between executive compensation and corporate social responsibility,and the correlation in the state-owned enterprises is more significant than that in non state-owned enterprises.The difference of the nature of the enterprise control results in the great differences between the relevance,which confirming the coordination hypothesis of interest conflict based on the theory of stakeholders can explain the correlation between executive compensation and corporate social responsibility of China's listed company.In order to ensure the robustness of the research conclusion,this paper examines the correlation between executive compensation and corporate social responsibility by variable substitution method respectively,and finds that executive compensation is negatively correlated with corporate social responsibility.Secondly,this paper continues to analyze the correlation between the different components of executive compensation and the social responsibility of the enterprises for the performance of different objects.Based on the literature review,executive compensation was divided into three components: wage salary,performance salary and equity compensation etc.,and the objects of corporate social responsibility were divided into the following five aspects: shareholders or investors,employees,creditors,government and business community environment according to the stakeholder theory.On the basis of the relevant assumptions and research model,through the empirical analysis this paper found that the correlations between different parts of executive compensation and different aspects of corporate social responsibility activities were positive,or negative otherwise,or else etc.Finally,this paper then reveals the internal mechanism of the negative correlation between executive compensation and corporate social responsib ility.It is found that corporate financial performance has a partial mediating effect(Mediating Effect)on the negative correlation between executive compensation and corporate social responsibility.This intermediary variable,the financial performance of the enterprise,can be divided into the incentive effect and the inhibition effect.Because the inhibitory effect is greater than the incentive effect,the final result is the inhibitory effect of corporate financial performance in the correlation between executive compensation and corporate social responsibility,that is,executive compensation is negatively correlated with corporate social responsibility.The innovation of the paper is concentrated on the following three aspects:First,the correlation between executive compensation and corporate social responsibility is discussed.Different from one other literature,the relationship between the two is discussed from the perspective of the impact of corporate social responsibility on executive compensation.This paper discusses the relevance of executive compensation as the independent variable and corporate social responsibility as a dependent variable.Not only that,this paper not only discusses the overall relevance between executive compensation and corporate social responsibility,but also analyzes the correlation between the different parts of the salary and the social responsibility of the enterprise,as well as the correlation between the executive compensation and the different objects of corporate social responsibility.The results show that the stakeholder theory can fully explain the negative correlation between the executive compensation and corporate social responsibility of the listed companies in China,and the negative correlation in the state-owned enterprises is stronger than that in the non-state-owned enterprises.The research also finds that the corporate financial performance has an incentive effect and a restraining effect in the process of the negative correlation between executive compensation and corporate social responsibility.As the effect of inhibition is stronger than the incentive effect,the results of the corporate executive compensation have negative effects on corporate social responsibility.Second,by introducing "corporate financial performance",this paper discusses its role in the process of correlation between executive pay and corporate social responsibility,and finds an explanatory factor to reveal the correlation between them.This paper constructs a variable of executive compensation,corporate financial performance as a medium variable,and corporate social responsibility as a solution.The research model of variables has found a way to explain the internal mechanism of the negative correlation between executive pay and corporate social responsibility.This approach,which combines executive compensation,corporate financial performance and corporate social responsibility in an analytical model,is a new attempt to study the correlation between executive compensation and corporate social responsibility.Therefore,this paper provides a multidimensional research path to study the correlation between executive compensation and corporate social responsibility,which not only extends the research depth of the correlation between executive compensation and corporate social responsibility,but also reveals the inherent mechanism of the negative correlation between the two.Third,on the study method,the three pairs of the combinations of executive compensation,corporate social responsibility and corporate financial performance are integrated into the same analysis framework,and the study of the correlation between executive compensation and corporate social responsibility is widened.At the same time,a simultaneous equation composed of three research models has been constructed,which not only solves the possible endogenous problems of the main research variables,but also solves the possible related problems of corporate social responsibility,executive compensation and corporate financial performance in the same research model in different periods.This method of studying the main research variables into the same research framework provides a supplement to the study of other similar research problems with similar relevance.Nevertheless,in this paper,a more scientific,more reasonable and more widely used classification method is not found in the division of executive pay and the division of corporate social responsibility.Therefore,on the basis of th is study,how to further analyze the relationship between executive compensation and corporate social responsibility among the new mechanism to explore the impact of the relationship for the executive compensation and corporate social responsibility related more new situations and new path,is worth further research.