Research On Senior Executives' Salary And Performance Of Company

Facing the challenge of knowledge economy and economic globalization, entrepreneurs do play a more and more important role in modern enterprises. They are the core of enterprises and are important human capital for economic development. However, as the development of the modern enterprises and separation of property right from managerial right, the problems that owner and entrepreneurs have different aims do exist. So, it has become a highly urgent and realistic task to set up a system to encourage the managers, so as to reduce the agency costs to the lowest and improve the operational performance.This dissertation falls into four sections. The first chapter is the introduction. It introduces the reasons of choosing this topic, the theoretical and empirical significance of this topic, provides an overview of the domestic and overseas scholars' research on this topic, and also explains the analytical methods, the layouts of the content and the innovation. The second chapter describes the relative theories. It defines several basic concepts related to the main topic of the dissertation, explains related theory of senior executive's salary. It discusses how the regulation on the disclosure of senior executives' salary evolves. Also it gives a statistical analysis of the senior executives' salaries based on the data of the annual report from 2001-2005. The third part is an empirical research on the factors that affect senior executives' salary and the effects of performance incentive. The fourth part comes to the conclusions and suggestion!Through the empirical analysis on the salary information of senior executive revealed by 733 companies listed in Shanghai and Shenzhen stock markets, we have reached the following conclusions:1.The conclusions of the univariate analysis: The coefficient between firm performance and senior executives' salary varies with performance indicators, listed in descending order of coefficient is earnings per share, cash flow from operating activities per share, return on assets and return on equity; A negative correlation was found between senior executives' salary and the performance indicators based on market. 2.The conclusions of multivariate analysis: When we use the return on assets, return on equity or earnings per share as the performance indicators, the senior executives' salary is correlated positively with performance for this year. When we use the return on equity or earnings per share as the performance indicators, senior executives' salary is correlated positively with the performance for current year and last year. But the coefficient between the senior executives' salary and performance for last year is smaller. Senior executives' salary and firm performance movement have no correlative relationship. In addition, senior executives' salary is related to the scale, proportion of state-owned shares, ownership structure and industry.3.The incentive effect of senior executives' salary: The larger a company is, the more remarkable the incentive effect is. The incentive effect is less remarkable in stated-owned company and relatively higher salary companies. Moreover, incentive effect is related to industry.