A Study Of Relationship Among Corporate Governance, Executive Pay Motivation And Performance In Listed Companies

The thesis elaborates on the relations between corporate governance and executive pay, corporate performance and executive pay based on the data of listed corporations in China from 2007 to 2009, aims to investigate what and how the relation is among corporation management, executive pay and corporation performance, for the sake of finding in which aspects needed improvement and how to improve. In corporate governance, the size of the board, the proportions of the independent directors, top executives' shares, to be at once the board director and CEO, the ownership of concentration and proportion of state-owned shares will be the measurement index; with the former three-year's salaries logarithm of executive as criteria, with EPS and ROA as executive pay criteria, based on the principal-agent theory and corporate governance, an empirical study is employed in the discussion of the mutual relations among the three in light of STATA10, furthermore the corresponding proposal and countermeasure are put forward based on the empirical result.According to the statistics, there has been a gradual increase in the absolute quantity of executive pay of the first three in listed companies, the growth is comparative faster; the difference is obvious among executive pay industries, the average of executive pay in real estate hold the highest or comparative higher degree, and the lowest in industrial enterprises; the proportion of top executive's shares is inadequate overall, the average is 1% in three years, there exists great gap with the proportion of top executive's share abroad; the executive pay difference is inapparent between state-owned enterprises and non state-owned enterprises, but the executive pay difference in non state-owned enterprises is bigger than that in state-owned enterprises.Through regression analysis, there have remarkable positive correlations between the board director holding a general manager concurrently and executive pay, as well as the correlations between the board and executive pay. On the contrary, there have negative inapparent correlations between independent director and executive pay; the state-owned shares were negatively correlated with executive pay obviously, as well as the correlations between ownership concentration and executive pay; the proportion of top executive's shares was positively correlated with corporation performance obviously.Based on the above analysis, proposed suggestions as follows:(1) Quickening the step independent director system, fully strengthening the role of independent director;(2) Eradicating the situation of the director and general manager holds a concurrent post, realizing the reform of administration appointing as the market appointing;(3) Increasing the proportion of top executive shares, Creating and perfecting long-term motivation system;(4) Rationalizing the proportion of state-owned shares;(5) Revealing in full and detail the payment distribution in corporate governance.The possible limitations of the thesis as shown in the following aspects:(1) Only the total amount of the first three top executive's salary is requested to disclose by China Securities Regulatory Commission, and the all executives is exclusive, thus undoubtedly narrowing the scope of the study. Besides, only the total amount is disclosed, and no detail classification among basic wages, bonus, allowance, in-service consumption, etc, which are unsuitable for individual studies. Furthermore, the invisible income of executives is difficult to count, which may affect some relevant studies to executive pay.(2) The thesis analyzes yearly and overall reunification data from 2007--2009, relatively, there exists insufficient study in empirical study from longitudinal perspective abroad, and with the section data and unstable panel data, which may influence some relevant studies to executive pay.(3) Other factors controlling:the factors which affect the executive pay are many, without mature consideration to all aspects, such as appointments and removals of executives. Meanwhile, the executive's education background, age, works experience and so on, which are worthy studying and should be considered in later research. (4) The model conducted in the thesis is the linear regression model., but not the non-linear model, the non-misalignment model, the later research may focus on the nonlinear modeling capability for the sake of rationale and all-round considerations.The innovations in the thesis as bellow:(1) The thesis finds out the way to extricate the unstable malpractice from the study result of the previous section data, and then presents an overall analysis on yearly and overall reunification data of 2007-2009.(2) To guarantee the stability of the result, EPS and ROE are selected as the indicator of corporation performance for the sake of guaranteeing the stability of the result.(3) The previous studies mainly follow into the relation's discussion between corporate governance and motivation of executive pay, corporate governance and corporate performance, motivation of executive pay and corporate performance, but lack of correlations' discussion among corporate governance, motivation of executive pay, corporate performance, and the thesis did some contributions to such drawbacks.