Research On Senior Management's Compensation And Corporate Performance In Existence Of The Ultimate Controller

The principal-agent theory is the cornerstone of corporate governance theory. How to reduce the agent costs between ultimate owner and the senior management and reach the performance optimization of listed companies is a topic of common concern. Recently, the pace of globalization put the listed companies of China into the international competition. Therefore, do research on the relationship between senior management's compensation and corporate performance in the existence of "ultimate controller" have special significance.This paper selects the data of Listed Companies in Shanghai and Shenzhen from 2008 to 2010 as samples, using Tobin Q to measure the performance of the companies, the monetary compensation and the shareholding ratio of the senior management to measure the senior management's compensation. First, the paper studies the impact of senior management's compensation on corporate performance through regression analysis. Then, according to the cash flow rights of ultimate controller, the total sample is divided into high group and low group. These two groups are regressed respectively to analyze the influence of cash flow rights on the relationship of the former two. Finally, according to the separation degree of two rights of ultimate controller, the total sample is divided into high group and low group. The two groups are also regressed and the differences are analyzed.The main conclusion of this paper are as followed:(1) The monetary compensation of the senior management has a positive correlation with the performance of companies; the shareholding ratio of the senior management is positive related with the performance in a certain range, but when the ratio exceed the highest point, the two is negatively related. (2) When the cash flow rights of ultimate controller is higher, the positive effect of compensation on performance is more obvious; conversely, more unobvious. (3) When the separation degree of the two rights of ultimate controller is lower, the positive effect of compensation on performance is more obvious; conversely, more unobvious.