An Empirical Study On The Effects Of Corporate Executives' Compensation Level On Firm Growth And Business Performance

Corporate executives is a special kind of enterprise human capital, which plays an important role in the modern enterprise management process, so it directly affects the business performance and long-term development of the enterprise. However, to make this kind of executives human capital effectively achieve the desired objective of government and society, it depends largely on the design of incentive and restraint mechanisms, in particular the level of executive compensation design. Although our government is constantly introduce remuneration policies to improve corporate executive pay management especially in state-owned enterprises(SOEs) and incentive mechanisms, there are still some problems from the practice. In order to implement incentives for executives, Chinese enterprises generally adopt a higher salary, but the incentive effect of such one-dimensional is not very effective.So incentive effects is very difficult to achieve mainly depended on monetary incentive pattern. Compensation is an important part of incentive and restraint mechanisms, and to a great extent, the choice of salary incentive mode affects the business performance and business growth. It’s necessary for company to design validly compensation policies and institutions, in order to let corporate executives make full use of their human capital, reduce agency costs, and encourage enterprises to grow better and faster. Especially under the background of a new round of compensation reform in our country, research on corporate executive compensation problem especially in state-owned enterprise not only take on urgency,but also has important significance both theoretical and practical.Based on principal agent theory, human capital theory,and the optimal incentive theory, this paper use statistical analysis and multiple regression analysis to empirical study company executive salary levels’effect on business growth and operating performance about Chinese listed companies of A-stock market from 2010 to 2014, and make a comparison between SOEs and non-SOEs. The purpose is try to reveal the problems existing in executive compensation incentives of the A-Stock listed companies, then improve the executive compensation incentive mechanisms and further enhance corporate governance levels and the incentive effects, finally provide theoretical support for China’s enterprises to design effective payment motivating mode.Through empirical analysis, we get the following conclusions:(1) Whether it is SOEs and non-SOEs, corporate executive annual salary levels has a positive incentive effect on business growth and operating performance; When looking further, we also found SOEs executive annual salary to the enterprise business performance incentive effect is bigger than non-SOEs;(2) SOEs executive shareholding present positive correlation with the enterprise growth, this empirical results further reveal the SOEs executive shareholding has a positive influence on firm growth;(3) Both SOEs and non-SOEs, executive shareholding is positively related to the business performance, which implies that the higher executive shareholding will results in better corporate operating performance;(4) The correlation between executive duty consumption and corporation growth appears to be positive, so it also indicate that executive duty consumption level plays a strong role in promoting firm growth;(5) Regardless of SOEs or non-SOEs, there has no correlation between executive duty consumption and the management performance of enterprises. The empirical results also shed light on the executive duty consumption levels have little impact on business performance.The new ideas brought forth in the paper lies in:(1) Using the latest authoritative data, this paper analyzes Chinese enterprises executive compensation reform dynamics and existing problems, at the same time, it also empirically reveals the effects of executive pay levels on enterprise growth and business performance;(2) Through more comprehensive empirical analysis, this article explores the influence of SOEs and non-SOEs executive compensation bringing to firm growth and operating performance.