Influencing Factors Of Top Manager Compensation: An Empirical Research On Listed Corporations Of China

With the development of marked economy and the release of executive compensation data, there comes more and more consideration on top manager incentive recently. How to construct top manager incentive mechanism suitable for our country's company is one of the most important problems. Based on this background, this paper worked on the influencing factors of top manager compensation. Hope to provide reference for the construction of incentive mechanism.This paper is on the foundation of principal-agent theory, human capital theory and managerial motivation theory, combines with both inner and foreign scholars' research fruits, analyzing the influencing factors of top manager compensation from interior, exterior and manager themselves. Then, this paper chose 303, 341, 351 listed companies of year 2004, 2005 and 2006 from Shenzhen Stock Market to analyze the status of our country's top manager compensation. And then, from the empirical point, this paper advances seven hypothesises, constructs a multiple linear regression model and uses 351 listed companies' newest data and stepwise regression method to validate each factor's influence on top manager compensation. In order to highlight the relationship between company performance and top manager compensation, this paper uses EVA efficiency substitutes EPS as independent variable to have a sensitivity tests on the multiple linear regression model.The results of the empirical research in this paper show that top manager compensation is effected by many factors. The demonstration indicated that top manager compensation positively correlates with company performance(EPS), company scale, area compensation level, industry compensation level and power balance with shareholder structure. The results also show that two post integration and stock holdings of managers have no significant effect on top manager compensation. Besides, if we use EVA efficiency to measure company performance instead of EPS, we found there was no significant relation between EVA efficiency and top manager compensation. From these results, we can conclude that there exist many problems in our listed companies: the structure of top manager compensation is not so reasonable and lack of long-term incentive, the "pay-outstanding achievement" contract is mainly determined by accounting index, value creation doesn't act as what it should do. Finally, this paper brings forward policy and advice to construct incentive mechanism of top managers.