Is Top Management Compensation Stickiness The Agency Problem

During recent years, the issue of top management compensation, a heating topic, is arousing more and more domestic and foreign scholars'common concern. Especially, the frequent incidents of"excessively"top management compensation lead to a mass doubt and suspect about the rationality of pays. The latest research has found that it takes on a"sticky"feature between top management compensation and enterprises'performance, that is, the dropping rate of pays as performance declines is significantly lower than the increasing rate of pays as performance increases, which means that enterprises reward good performance but do not punish for bad. What has resulted in the"stickiness"of top management compensation? The writer of the thesis intends to study the issue and expect to provide the government and general investors with some inspiration.By selecting 2003-2008 listed companies as the study sample and adopting empirical methodology, the thesis studies the existence of sticky issue of top management compensation in listed companies based on the stickiness-model, level-model and change-model, and goes further to study the elements of stickiness of top management compensation from the angle of agency problem.The study of the thesis shows that the top management compensation of listed companies in China takes on a feature of"stickiness", and meanwhile a higher service consumption usually accompanies a higher stickiness of top management compensation; independent directors can not restrain the stickiness of top management compensation, but reversely enhance it. The findings above disclose that the current top management compensation system of China is unable to control the cost of agency. The existence of"sticky feature"in top management compensation system points out that it is an agency problem which is deserved to be settled, Therefore, strengthening the management of companies and stimulating the executive group in an effective way is the fundamental approach to dealing with the problem of"sticky"top management compensation in listed companies.