Research On The Validity Of Executive Compensation Incentives Of China's Listed Banks From The Ownership Structure

Commercial banks occupy specially important status in the economy development and country's financial security. The validity of top-management compensation incentives of commercial banks has the direct effect on the deputy's incentive impact, and have the effect on the bank's working efficiency and operating risk. Being the base of the governance structure, commercial banks'ownership structure plays important governance impact.In the context of the senior executives of commercial banks getting high salaries for many years, the research based on chinese listed commercial banks,according to the listing on the Shanghai and Shenzhen 2005-2010 years of annual financial data between 16 commercial banks, has an empirical analysis on the validity of top-management compensation incentives of china's listed banks from the ownership structure. In view of the particularities of the commercial bank, the study puts the indicators that reflect bank profitability, liquidity, security, growth into the scope of banking performance,using factor analysis method, builds a comprehensive performance model of commercial banks, and measures the overall performance scores for the listed commercial banks. This study targets executive pay as explained variable, bank performance, asset size, scale, proportion of independent directors of the board and equity structure as explanatory variables, builds the regression models. The empirical results show that:Firstly, the ownership concentration appears a negative correlation with the commercial executive pay levels. Secondly, the validity of top-management compensation incentives in the commercial banks of high ownership concentration is stronger than the banks of low ownership concentration. Thirdly, the commercial bank's executive pay level of the largest shareholder as a unit of the state is lower than that of the first shareholder of the corporate shares of commercial banks. Finally, the executive compensation incentive validity of the largest shareholder as a unit of the state commercial banks is higher than the first shareholder for the corporate shares of commercial banks.Based on the results of the empirical analysis, in order to improve the effectiveness of the commercial bank executives'compensation incentive, improving banks'governance mechanism, this study puts forward the recommendations of the effectiveness of pay incentives. Firstly, we should improve the basic conditions of the effectiveness of executive compensation incentive,for example we should construct a combination of incentive pay system, optimize pay payment, strengthen internal and external salary regulation, etc. Secondly, the improvement should be based on ownership structure executive compensation incentive validity, for example the china's commercial banks should optimize the ownership concentration forming appropriate ownership concentration, reduce national unit stake to form reasonable equity agency, introduce domestic and foreign institutional investors, and speed up the establishment of commercial banking manager market, etc.