Government Intervention,Executive Compensation Contract And Corporate Performance

In the particular context of China's economic transformation, our weak legal environment enables government intervention as one important mechanism of our country, which uses them to ensure the implementation of executive compensation contract. On the one hand, government intervention mechanism plays an important role in restraining the implementation of various opportunisms,which is helpful to ensure the implementation of executive compensation contract. On the other hand, based on its inherent rigidity, reinforced government intervention may also cause some spillover effects, thus forms a series of implicit compensation contracts, thereinto, perquisite consumption is one of the most important realization ways. Meanwhile, at present, studies on the implementation mechanisms of executive compensation contract mainly focus on the private implementation mechanism in academic circles, studies on the influence of government intervention on the composition and efficiency of executive compensation contract are still relatively weak.Based on the reality above, using 1819 samples of China listed companies during the period 2003-2006, the essay chooses "Reduction of Government Intervention on Enterprises" in the "Marketization Index for China's Provinces", which is compiled by Fan Gang et al., to quantify the government intervention of different districts in our country, and we take the relationship between monetary reward and perquisite consumption as the breakthrough point, through exploring the influence of government intervention on the composition and efficiency of executive compensation contract, we specialize on the transmission mechanism and corresponding results of government intervention effects. In order to explore the differences between different ownership property further, according to the different ownership property, we divide the complete samples into two parts, which are stated-owned samples and non-state-owned samples, and contrast tests are made between them. Based on the study above, the essay finds:First, significant negative correlation is observed between perquisite consumption and monetary compensation in the state holding listed companies, there exists substitution relation between them; and significant positive correlation is observed between perquisite consumption and monetary compensation in non-state holding listed companies, there exists complementary relation between them. Second, in the state holding listed companies, reinforced government intervention may strengthen the relationship between monetary compensation and perquisite consumption; in non-state holding listed companies, the influence of government intervention on the relationship between them is not significant. Third, in the state holding listed companies, monetary compensation is positively correlated with corporate performance,but the relationship between them is not significant, perquisite consumption is marked negative correlated with corporate performance; and government intervention may not only weaken the positive relationship between monetary compensation and corporate performance, but also it may weaken the negative relationship between perquisite consumption and corporate performance.