Research On Relationship Of Executive Pay And Corporation Performance Of GEM

Top-management compensation problem derives on the separation of ownership andcontrol in modern enterprises. Executive pay, as the incentive mechanism of enterprisescontent, has become an important concern--Wall Street top-management compensationmechanism would be an important reason for the American financial crisis. Taken the135high technology-based SMES(small and medium-sized enterprises) which havelisted on GEM(Growth Enterprise Market) in China as the overall sample,the paperstudy the relationship between the top management compensation and performance of thelisted companies by using statistical description analysis and hypothesis testing analysis.We also hope to provide basic experience and reasonable suggestions for the futuredevelopment of the SMES.Firstly, we review the domestic and foreign executive compensation by makingsome theory analysis between the top-management compensation and companyperformance from the following aspects: the Principal-agent theory, human capital theoryand incentive theory, which has laid the theoretical foundation for this paper.Then we make the descriptive statistics analysis about top-managementcompensation and performance of the GEM. By constructing linear multi-regressionmodel and curve model, with correlation analysis and multiple regression analysis, theempirical results show that the company performance and top-management compensationare significantly positive correlated, but company performance and executives'shareholding are not significantly positive correlated. Among the influent factors,top-management compensation and the company scale,the degree of ownership balance,the scale of boards of directors, the manpower capital investment and the monetarycapital investment are significantly positive correlated while top-managementcompensation are not correlated with the independent director proportion. It shows that"Reward-Performance" contract has been formed basically,but there still exists someproblems such as unreasonable top-management compensation structure and incomplete corporate governance structure.Finally, this paper puts forward some suggestions which could optimize the GEMexecutives' incentives in China and analyzes limitations of this paper that needs futureresearch for the improvement.