An Empirical Study On Relationship Between Executive Incentive And Corporate Performance Of State-owned And Private Listed Companies

In recent years, the state-owned and private listed companies'speed and scale have entered a rapid development track. It can be said that after the listing of enterprises, the operating is more standardized and the corporate governance structure is also gradually improved. But, because the modern corporate separation of ownership and control, the objectives and interests of business between the senior management and the owners are prone to be inconsistencies, and coupled with the existence of information asymmetry, resulting in a principal-agent problem and an incentive and constraint problems with executives. The role of incentives as a means to inspire employees to work in the business is increasing. Executives of private enterprises often use performance-related pay, year-end performance appraisal system, the annual salary system, or equity incentive plans and other incentives to mobilize the enthusiasm of the working executives to improve company performance. But the illegal earnings management and executives job-hopping phenomena that often occur in listed companies, fully explain the existing incentive mechanisms are inadequate.The reason for the decline of performance in the listed companies may be diverse, However, there is no real established listed companies with market economy rules corresponding to the operating mechanism should be more fundamental, and its important manifestation is the pay levels of senior management staff with the company's departure from the level of performance. When information asymmetries does not exist between managers and shareholders, and when the contract is complete, then the incentive contract would not be needed. But, the reality of the market is not perfect, there is the issue of moral hazard and adverse selection in the manager of the company, agency costs are inevitable. For the pursuit of wealth maximization of the shareholders, in order to minimize agency costs, it is necessary to conduct the company's executives to implement a variety of incentives to encourage them to increase the owner of the wealth of activities. So, how the existing form of incentive right impact the corporate performance? Of China's state-owned and private listed companies, what kind of incentives should take?This is precisely the main issues that the author want to study.In this paper, the author selected 293 state-owned manufacturing Listed Companies and 155 Private manufacturing Listed Companies'A shares in Shenzhen and Shanghai Stock Exchange, from the company's profitability and equity to analysis the correlation between the executive's pay in cash, executives holding and the performance of the company. The main conclusion is:China's state-owned and private listed companies'executives'reward in a marked improvement in cash, and significantly correlated with the corporate performance, that is able to show some of the incentive; in China's state-owned listed companies, The phenomenon of senior managers that holding stocks has been more common, but the percentage is still low, and little incentive; Private listed companies show significant positive correlation between the corporate performance and the executives holdings. Executives implicit incentive and corporate performance is not obvious in both state-owned and private listed companies. In state-owned listed companies,when executive ownership percentage is greater than 0, the positive correlation between the company performance and executive's pay is lower than the situation of executives holding is equal to O.In Private Listed Companies, when executive ownership percentage is greater than 0, the positive correlation between the company performance and executive's pay is higher than the situation of executives holding is equal to 0. From the comparisons of the private and state-owned listed companies, the positive correlation between the company performance and executive's pay in Private Listed Companies is higher than the state-owned Listed Companies. Private executives of listed companies on the extent of explicit incentives is higher than the state-owned listed companies.Finally, in accordance with the results of empirical analysis, put forward policy recommendations that can be as a reference and draw value.to the incentives of the executives in China's private listed companies.