A Study On Information Disclousure Of Executive Compensation Based On Chinese Listed Companies

For short of senior managers or top managers, company executives are personnel specializing in the management functions. Based on separation of ownership and management rights, owner and executive, they are including directors, managers, etc. Executive compensation includes executive pay levels and structure.With four parts including salary, bonus, welfare and equity incentives. Besides, "golden parachute" plan provided by company is included in it. The part of equity incentives include equity incentive stock options, restricted stock, stock appreciation rights and deferred stock performance payments.Executive compensation generated from agency theory in order to reduce agency costs and incent executives. However it triggered the agency costs problem in practice and then becomes major problem in corporate governance. Therefore, the information of executive compensation is particularly important. Information disclosure from both economic theory and academics research shows that transparent, real information is an important factor to achieve effectiveness of the capital market. Executive compensation disclosure includes the amount of compensation and pay system. In addition to theoretical analysis of the importance of information disclosure, the study makes empirical research on the basis of time-series data on the level of executive pay and company performance for correlation. Through the enhancement of correlation and significance level between the executive pay and company performance after the strengthened of compensation information disclosure, the paper can prove the importance of executive compensation information and rule-making.By studying the pay levels of listed company in China, the paper found that with the rising of executive pay and stock market development, Chinese regulatory bodies have issued several regulations on executive compensation of state-owned enterprises and financial institutions, giving guidance to the limit of executive pay, structure and pay system.Compensation regulations issued by regulator have a major impact on executive pay of the state-owned enterprises. Smilarly, regulations about executive compensation disclousure issued by regulators may have great importance to the disclosure of all listed companies in China. The paper sorts out the laws and regulations on the executive compensation disclosure mainly since the setting up of Shanghai and Shenzhen Stock Exchange.Meanwhile, we find many problems in disclosure regulations.After this, the study makes a cross-national comparison by executive compensation and disclosure to United States, Japan, Germany and China.Finally, based on the comprehensive study, the study made a series of suggestions for improvement on the executive compensation disclosure. It suggests to strengthen the content of information disclosure of executive compensation, including the expansion of disclosure on executive compensation and pay system, improvement the disclosure of disclosure tools, strengthening the construction of the Remuneration Committee and detailing qualifications of its members. It also involves four parts which related accounting information, including listed companies, accounting firms, regulators and Institutional investors,to ensure that the information of executives'pay true and reasonable. But listed companies and state regulatory play an important role in this process. In other words, it is important to improve the executive compensation disclosure of listed companies from the point of corporate governance and regulations.