An Empirical Study On Contributing Factors Of Executive Compensation Of Listed Companies In Sichuan Province

As decision makers and performers of companies, executive play an very important role in the enterprise. It can be said that the lifeblood of business rests in executive. How can we mobilize the enthusiasm of executive to do their best for the business? The incentive for executive is undoubtedly an outstanding problem. Among them, compensation incentive as a most important mean to motivate executive has been a hot discussion for scholars. A reasonable compensation incentive mechanism can effectively improve the working enthusiasm and efficiency of executive, avoid agency failure, brain drain and other negative phenomena. Therefore, studying the impact factor of executive compensation has great significance.Compared with abroad research, some problems still exist in domestic research, most of them are normative research, empirical research only take a small part; On the other hand, some characteristic factors are not considered simultaneously, including some worthy factors; In addition, previous research position in all listed companies or specific industry, fewer study specific Area. This thesis will place perspective on the Sichuan listed companies, with a view to have a more in-depth exploration on the factors affecting the executive compensation on the basis of the previous studies, and propose some targeted recommendations for the establishment of executive compensation incentive mechanism of Sichuan listed companies. There is no such study about executive compensation incentive of Sichuan listed companies at present, that is why the paper studies.This thesis selected 2006-2008 Sichuan companies listed in Shanghai and Shenzhen as a sample, using SPSS software to make an empirical analysis of contributing factors of executive compensation. The outcome indicates that:1. Executive compensation of Sichuan listed companies exist the following characteristics:The average of executive compensation showed upward trend and rose by a big margin; The overall level of executive compensation is still low; The shareholding of executive and the proportion of companies which have given share to executive were increasing in recent years; Corporate Governance has a significant impact on executive compensation.2. Executive compensation of Sichuan listed companies has a positive correlation with corporate performance, enterprise scale, whether there is a remuneration committee and the shareholding of executive, and it has a negative correlation with duality of CEO and chairman; Corporate liabilities, the growth of corporate, the age of executive, the shareholding of State, the proportion of independent directors, centralization of equity have not significant impact on executive compensation.3. Executive compensation of Sichuan listed companies is affected by many factors. We found the sequence of contributing factors of executive compensation by multiple linear regression model:enterprise scale, corporate performance, duality of CEO and chairman, whether there is a remuneration committee, the shareholding of executive.4. Under different incentive mechanism, the contributing factor of executive compensation has some differences. The most significant difference is the relationship of executive compensation and corporate performance.There are 6 parts in this paper:Part 1 is a brief introduction of background and purpose of this study, the main content including theoretical basis and research method, as well as the framework and contribution.Part 2 is the summary of related literature. It reviews previous research on contributing factors of executive compensation.Part 3 is the theoretical analysis on Principal-agent Theory, Managerialism, Motivation theory, Human resource theory and Property right theory, and thus make relevant assumptions.Part 4 described some of the major collection and processing of date, the selection of indicators, as well as the choice of empirical analysis model.Part 5 includes a descriptive analysis of a sample of the variable indicator, correlation analysis, regression results and tests and analysis, and comparative analysis of contributing factors of executive compensation under the different incentive mechanism.Part 6 includes the conclusion and suggestion. It expatiates the research conclusions, puts forward the suggestions. At last, it mentions the limitations in this paper and areas for further study.The main contributions are as follows:There are 11 key variables from different aspects;Makes the establishment of compensation committee a dummy variable to check whether the compensation committee plays an effective role; According to different samples of the incentive mechanism, we divided into two categories. Then found that under different incentive system, the contributing factor of executive compensation has some differences.There are inevitable some limitations in this paper. Firstly, The number of samples is still relatively limited, we does not do time series analysis because there are many irregularities in date collection, and thus the final results of the analysis would result in the inevitable impact. Secondly, this study had the problem of missing variables. Third, we only use the simple multiple linear regression model.The future research:1. With the development of the theory and practice, broadening variables and choosing the more appropriate indicators are one of the direction for future research.2. With the development of domestic stock market, time-series data can be used to conduct comparative studies in the case of more and more selectable sample.3. With the improvement of the market system and the quality of information, future empirical research on this issue can be improved.4. As the system of stock option in listed companies continue to spread, stock options could be incorporated into the scope of executive compensation.