The Empirical Analysis Of Executive Compensation And Financial Performance Based On State Holding Chinese Listed Companies

The financial crisis has been out of our view, but the impact of the crisis is always in our minds. Many CEOs of the financial sector in the foreign countries let their pay cut to help the company through out of the crisis. This has led to the domestic financial pay cut. A heated discussion of high pay for the CEO of state-owned enterprises occurred. The salary issue of the state-owned enterprises is the widespread problem in China, not only concerned by the research field, but also the industrialists.Designing encourage scheme is the central question of the Entrusted to agents theory, and the core of encourage scheme is the design of the scheme. There are many scholars in home and abroad do researches on the relationship between high salary of CEOs and performance of the company. High salaries could encourage the managers to keep up the work and bring good performance of the company and the optimal allocation of resources. It can bring about maximization of the company value and eventually achieve the maximization of the shareholders' wealth.State-owned enterprises are the lifeblood of our economy, is the key to our economic development. The CEOs of State-owned enterprises as the core policy maker make a key role to enhance the performance of the enterprise, so to the country and our people. Therefore, improve the availability of salary system of State-owned enterprises is especially important. However, there are no research studies about this.We hope that through this study, we can gain a clearer and reasonable conclusions of the relationship between higher pay of CEOs and the performance of state-owned enterprises. Through this we hope that we can find some theory to support for the implement of the pay encouragement.This article falls into six chapters and each chapters of the following: The first chapter:introduction. This paper mainly introduces the background of the study,research purposes,research clue,the frame structures and the method of the research, and is good for the further studies after a good hint.The second chapter:document reviews. On the analysis of existing literature, I find that in foreign literature that salaries inspiration is generally accepted and run effectively. Due to the limited market development levels, domestic research is late and has not found agreeable conclusions. Also, the sample data is seriously outdated. So we need to do new research using new sample data to checkout the relationship between the CEO salary and performance of State-owned enterprises.The third chapter:theoretical analysis. first to define the important concept (the state-owned company, manager, CEO salaries, the company's financial performance and factor analysis). Second to explain the four theories which is the basis of this article (entrusted to agents theory, Inspire theory, human capital theory and convergence of interest).Chapter 4:Analysis of the relations between the CEO salary and performance of State-owned enterprises. First, introduce the background of state-owned enterprises. Second, analysis the relationship. Then, we listed the subsistent problems of the company executives'salary in these State-owned enterprises.Chapter 5:Empirical research. We use the perspective of empirical research to analyze the relationship between the CEO salary and the performance of State-owned enterprises. Using 2007-2009 data as sample which from shanghai and Shenzhen stock exchange of china. Using variable F which comes from factor analysis as the company performance variable and using CEO pay, managerial ownership, company size and industry as explaining variable. After the establishment of a regression model, we can conclude:1. There is a positive relation between the CEO salary and the performance of State-owned enterprises.2. There is a positive relation between the CEO salary and in-service consumption in State-owned enterprises.3. There is no relation between manager's percentages of shareholding and the performance of State-owned enterprises. 4. There is a positive relation between the financial performance of State-owned enterprises and the scale and industry.Chapter 6:Conclusions and recommendations. According to the empirical research conclusions, put forward to the following several policy proposals:1. To improve pay mechanism2. To improve stock incentive compensation3. Strengthen supervision and legalization, and increase the transparency of the CEO's salary4. Combine rewards with penalties, and use the credit risk assessmentThe main contributions of this study are:1. Using State-owned enterprises as the breakthrough point of this paper. It has reference value to the pay inspire of State-owned enterprises.2. On data choice, use the latest data. This paper selects our country's stock exchange State-owned enterprises'2005-2009 data as sample for regression analysis. On one hand, we can find the latest research trend, on the other hand, also keep research consistency.Of course, this paper also exists some shortages, include:1. Sample interval choice particularity. This paper chooses 2007-2009 as sample interval, at this time, China's stock market has experienced from the big bull market to big bear market, the companies'financial performance are seriously affected, and it has certain effect to the study results. In this paper that the conclusions maybe not correct after completion of reform of non-tradable shares formed.2. Financial performance indicators remain to be improved. Due to the limitations of index selection, unavoidably exists shortness. In the later study, we can try some other methods to avoid the above shortcomings.