The Influence Of Corporate Governance On Top Executives Compensation: An Empirical Analysis

In recent years, the top executives compensation becomes the focus of academic study and the public. Domestic and international academic studied from different angle to analyze the impact factor of the top executives compensation, a branch is the influence of the corporate governance to the top executives compensation. The top executives are the main decision-making person in the corporate organization,the quality of the corporate achievements,the corporate shareholder's benefit realization, is related in the great degree with the top executives'choice and decision-making.Therefore, between the corporate shareholders and the top executive's proxy relationship has the prominent important point without doubt, through the reasonal corporate governance so as to make the compensation efficiency is certainly to receive the domestic and foreign attention.However at this point,domestic and foreign academic studies havent a system explaination about the executive compention.Looked from the domestic research situation, the influence on the executives compention is focus on the corporate achievement ,the stochholder's rights structure and the mutiplication,the studies on thecorporate governance such as the size of the board ,the independent director of board,the independence of the director,the ratio of share the CEO and the top executives held,the president and general executives dual situation etc. is not that much.An inquisition show that in the Standard Pool 500 business enterprises, the average number of board of directors is 13 people, board director about 10 people in the exterior, but the business enterprise of Japanese of the same scale, the board of directors is almost all internal board director, most of can reach to 50 people.Therefore, a nonexistent standard that can generalize all"the good corporate governance", but usually measure with a set of factors , for example, the size of the board, the independent director of board,the independence of the director, the ratio of share the CEO and the top executives held, president and general executives dual situation for work etc..However passed through more than 20 years reform,our country already establishes the market economy system,the lives of the people level had a remarkable enhancement,our country market economy still is not standard,not perfectly, there are many flaws in the macroscopic system and the microscopic foundation.The enterprise is the market economy microscopic foundation,the listed company is also typical reprsentative.Modern enterprise has had the property rights and the operation right separation,the top executives is the actual control person,their performance in some point will decided the fortune of the company.The top executives comensation system is the enhancement on the corporate quality,promotes important link which the market continues to develop.To analyze the top executives compensation, first must study the influence of corporate governance on top executives compensation,only through this way,can solve this problem rightly.This paper carry on a related data for the example with the listed company in 2003 and 2004 using the foundation which from home and abroad study. Using the scale of the board and supervisory board, the ratio of independent directors,president and general executives dual situation as independent factor,the ROE, final controler's situation,the scale of the company,the industry that the company belongs to,as the controlling factor, make use of multivariate regression statistic and descriptive statistic methods to the model that this paper set. The empirical study discovers that the bigger of the scale of the board,the higher of the top executives compention, this conclusion shows that the board is inefficiency.Because supervisor is the employee in the company and he is not an expert, the supervisor scale can not show the influence of the top executives compensation. New corporate law enhance the power of the supervisor,we hope the effect can get improvement.The independent board director's most working talent is the benefits which supports shareholder and other benefitses related, but in this paper's evidence research found that the higher ratio of independence in the board,the higher pay to the top executives compensation,so this conclusion announce to public that an independent board director is not independent in the our country. The jobs of the president and general executives's separation is good to independence and management decision space of board of directors.The top executives in the meantime as the president is good to the balance of power, will increase the top executives's control to the company, and have bigger influence to the board, influence the independence of board.The research shows that president and executives dual situation havn't an obvious positive impact to the top executives compensation.This explain the authority of the top executives in our country. The scale of asset,the industry that company belongs to,the final controller also have some impact to the top executives compensation.The paper's contribution lies in that we analyze the influence of corporate governance on top executives compensation systematically.The variables is also to connect with the real situation in case to make more conviction. But,because the top executive's personel indivual quality,the level of effort,the risk manner,the decision power and so on is very difficulty weigh with the simple quantitative index, also,the cash reward concept which may measure is extremely broad, and this paper has only select the cash reward which can measure, the other like personnel's expenses in office have not calculated.So,the results of this paper is not to reprent the cause and effect inevitability.Which mechanism cause this relativity is a further research. Moreover,the other factors of corporate governance such as the ratio of the exterior director,the conference that the independent director and the supervisors held,whether the independent director express their independent opinion,the director and the supervisor's knowledge and so on, because the length limition,has not covered in the middle of this paper,this also a direction which this paper further studies.All in all,the listed company's reform of the compensation system is more complex,the research on the factors of the senior executivesial compensation is only the first step.