An Empirical Research On The Relationship Between Executives Compensation And Corporate Performance

In June 2006, State-owned Assets Supervision and Administration Commission of the State Council promulgated the guidance on the executives'non-pecuniary compensation of Central government enterprises.On March 11, 2007, Auditor General of the National Audit Office of China, Mr. Li Jinhua was interviewed by the media. He said that as an anti-corruption measures, the government will introduce official non-pecuniary compensation standards and norms officials'non-pecuniary compensation. At the same time, non-pecuniary compensation was push from behind the scenes to the prospects. It is an act that executives with their special identity,in the name of working need meet the individual needs by payment of the government or enterprises.Establishing a scientific and rational executives incentive system and inhibiting excessive non-pecuniary compensation is an urgent need for modern enterprise reform and is also a hot research issue of the theoretical circle.For this reason, this study selects the relationship between executives compensation (including monetary compensation of executives and non-pecuniary compensation ) and corporate performance as a starting point.For an in-depth understanding of the condition on executives'non-pecuniary compensation of Chinese listed companies, the role of non-pecuniary compensation playing in the executives compensation system and whether or not it has a negative economic consequences, on the basis of the analysis of executives'compensation content,this paper divides executives compensation into two main parts: one part is monetary compensation of executives, and the other part is non-pecuniary compensation which is closely linked with the position of executives. At this time, the research on the relationship between executives compensation and corporate performance evolves into the research on the relationship among monetary compensation of executives,non-pecuniary compensation and corporate performance. This paper selects A-shares of all listed companies in Shanghai and Shenzhen Stock Exchange in 2006 as the research object. Data come from CSMAR Database of GTA Information Technology Co.,Ltd,Wind of Financial Database in China,Official Website of China Securities Regulatory Commission, cninf Database of Shenzhen Securities Information Co., Ltd and the financial statements of listed companies and so on. Eventually, we get 654 sample data.This paper is divided into five chapters:Chapter One is an Introduction. This chapter covers the paper's research background, significance, research purposes, research methods and research process.Chapter Two is the review of the Literature and related theoretical study. This chapter is the theoretical cornerstone of this paper. Firstly, this chapter defines executives,compensation, executives compensation, monetary compensation of executives, non-pecuniary compensation, and other related concepts; Secondly, this paper reviews related empirical literatures home and abroad between monetary compensation of executives and corporate performance, non-pecuniary compensation and corporate performance; Finally, this chapter gives us an study on theoretical analysis and discussion of the relationships between monetary compensation of executives and corporate performance, non-pecuniary compensation and corporate performance.Chapter Three is the design of the research. This chapter is one of most important parts of the paper. This chapter is primarily preparing for the following empirical study.Chapter Four is the analysis of the empirical results. In this paper, the chapter is the main part of empirical research.Chapter Five is the conclusion of this study. Through empirical study, we come to the following conclusions:The first one is that monetary compensation of executives was under the influence of government regulation;The second one is that the average level of State-owned listed companies'non-pecuniary compensation is much higher than the level of non-state-owned listed companies;The third one is that among state-owned listed companies, the higher non-pecuniary compensation, the lower corporate performance is;The fourth one is that among non-state-owned listed companies, the higher non-pecuniary compensation, the higher corporate performance is;The fifth one is that among state-owned listed companies, the higher non-pecuniary compensation, the higher corporate performance is;The sixth one is that comparing with non-state-owned listed companies, executives'compensation has a much lower potential impact on corporate performance.