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Research On The Incentive Effect Among The Senior Executives Of The Listed Companies In China

Posted on:2011-11-07Degree:MasterType:Thesis
Country:ChinaCandidate:J XieFull Text:PDF
GTID:2189330332985133Subject:Accounting
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In the various contract of the firm,the core one is just the compensation contract.Because whether the compensation is rational influnces the job performance of the executives as long as the outcome of the firm.We can say that an rational compensation contract may significantly inprove the efficiency of the company while the terrible one make the counter result,such as reducing the efficiency increasing the unnecessary cost and at last making the company at sixes and sevens.So it is important for the pricipal to design an sensible,fair,effective contract coordinate the contradiction between the principal and the agent,then the key thig turn out to be the ammount of the salary that the principal should pay for the agent.The author thinks that the standard should be the outcome that the agent has brought to the company,however,where is the criterion?The article tends to agree with the idea that the salary shoud be bounded to the performance.How do the principal connect the compensation with the later?The key point is that there must be an rational Performance Evaluation System.We can see that the salary is just the return of the agent's work performance and also is the agent cost that paid by the principal,so the principal hopes himself can get what they desire—the promotion of the the firm's profits,If he gives the pleasant salary to the agent,the agent will make his best to make the goal of the firm come true,if he failes,he will get little,of course,neither of therm anticipate this result.The information transmission mechanism should be:the agent works hard in order to the good performance of the company while the good performance can also brings the increase of the agent's salary,so the cycly continues and the firm turns around smoothly.So in this way,the core point that influnces the efficiency of the mechanism exists in the fact whether the change of the firm's performance keep in touch with that of the compensation,in other words,wether the agent gets what he should get and the salary deserve his hard work is the most important thing,which is just the topic of this article.According to the classification of the compensation and the performance,our main research turn out to be two questions:(1)the correlation between the monetary compensation and the non-market performance;(2)the correlation between the equity compensation and the market performance.Having considered complex factors that may influnce the monetary compensation and equity compensation,this article tends to establish the model of the multiple linear regression to do the empirical examination in order to get the incentive effect of the compensation. The empirical result shows that the monetary compensation has the much more relevant significance with the non-market performance than it with the market performance,while the equity compensation goes the contrary result.Both of the results confirm one fact that the incentive effect of the compensation exists,though the effect is week.The week effect comes form two facts from both inside and outside of the company,firstly,the lack of the sensible performance evaluation system inside the firm which lead to the lose of the compensation's guarantee,while outside the firm the effective capital markets and the professional manager market which make the formulation of the compensation lacks the reasonable standard.So the most important thing for us to do is to establish an fair,rational,effective performance evaluation system, of course,this needs all of us to make our best to realize every part's benefits.
Keywords/Search Tags:The Monetary Compensation, The Equity Compensation, The Performance Of The Firm, Incentive Effect
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