An Empirical Study Of The Relevance Of Executive Pay And Corporate Dividends In Listed Companies

With the establishment of modern enterprise system in China, the principal-agent problem became the focus in the research of the Listed Companies' governance. What's more the principal-agent relationship between shareholders and executives was the focus of the study. People tried to design an effective system of executive pays to alleviate the growing principal-agent problem in the listed companies.Until now there were a lot of research about how to design executive pays and effective executive incentives, what's more they had come to one conclusion. This article tried to analyse the relationship between the executive pays and corporate dividends to solve the principal-agent problem. The executive pays and corporate dividends could represent well the interests of shareholders and executives. When the interests of shareholders and executives achieved a win-win state, the principal-agent problem was solved. At this time the executive pays and corporate dividends formed a positive relationship. The implementation of corporate dividends was also a effective means to monitor the executives' activities and to solve the principal-agent problem. The research of the relationship between the executive pays and corporate dividends was helpful to find the principal-agent problem in the listed companies. It was a completely new perspective to analyse the principal-agent problem.This article applied theoretical research and empirical research method, summarized the previous studies, put forward the research direction according to principal-agent and dividend-agent theory and then analysed the relationship between shareholders and executives, executive pays and corporate dividends by using the game theory model and empirical analysis model. The conclusion of the game theory model analysis was that there was a Nash equilibrium in the company, it achieved the maximize interests of shareholders and executives, while the executives took action to maximize the interests of shareholders and the shareholders implemented monitoring strategies. After the empirical analysis of the correlation between executive pays and corporate dividends, the conclusion was that the correlation between executive pays and corporate dividends only existed in private enterprises. It showed a better principal-agent relationship in private enterprises. Finally the article did a further analysis of this phenomena and proposed countermeasures.