The Empirical Study Of Management's Compensation Structure And Corporation Performance

According to principal-agent theory, in order to avoid moral hazard and adverse selection of management, corporate owners should establish an incentive mechanism to encourage and restraint behavior of management, because of this, corporate management take the most beneficial action against corporate for their own interests. In this paper, implicit compensation such as perquisite consumption had been introduced to compensation structure of management on the basis of the traditional compensation structure was built of dominant compensation, such as monetary compensation and managerial ownership. Eight different compensation structures were formed by different combination and different structure of monetary compensation, managerial ownership and perquisite consumption.Based on compensation in different forms have different incentive effects and intensity for management, this paper studies compensation structure characteristics of management of listed companies in China and the relationship between compensation structure and corporation performance. The results show that, in all types of compensation structure summarized in the article, the compensation structure of high level monetary compensation and low perquisite consumption have the best incentive effect, the compensation structure of low monetary compensation and high level perquisite consumption have the worst incentive effect, the rest types of compensation structure have the intermediate level incentive effect. Increasing monetary compensation is going to enhance the incentive effects of compensation structure, but increasing perquisite consumption is going to weaken the incentive effects of compensation structure, managerial ownership affects compensation structure in two ways,and affected by monetary compensation to some extent, when monetary compensation is low, increasing managerial ownership is going to enhance the incentive effects of compensation structure, when monetary compensation is high level, increasing managerial ownership is going to weaken the incentive effects of compensation structure; Monetary compensation and managerial ownership are positively correlated with corporation performance, perquisite consumption is negatively correlated with corporation performance, and however, the significant level is different with each other. The corporations of different ownership type, different assets, different industry and different region have different compensation structure, and affect the relationship between compensation structure and corporation performance.