Empirical Research On The Relationship Between Exeutibe Compensation And Performance Of Listed Companies In The Chemical Industry

This dissertation took listed companies in the chemical industry whichwent public before December31,2007as research objects, then carried outempirical research on the relationship between executive compensation andcorporate performance with data of2008,2009and2010. First, it concludesthe current status of domestic and international executive compensation andcorporate performance generally by investigating, analyzing andintegrating the relevant literature; meanwhile, it develops a systematic studyon human capital theory, the principal-agent theory and incentive theory.Second, the research obtained data of executive compensation from thedisclosure corporate annual reports by summing up the cash compensationand Stockholder's rights drive, then by averaging the top three. Afterstudying various types of enterprise performance evaluation, Economic ValueAdded (EVA), which was promoted by 'the State-owned Assets Supervisionand Administration Commission' was made the index of enterpriseperformance, with introduction of basic principles and calculation methods ofEVA. Next, the executive compensation and EVA were calculated andanalyzed by descriptive statistics. The results show that executivecompensation was increasing every year, of which the eastern region is thehighest with central and western coming the second and third. What's more,executive compensation of the state owned companies is lower than that ofnon-state-owned companies. Results of EVA analysis indicate that losses existin almost all listed companies in the chemical industry. Companies with aminus EVA accounts for62%,57%,43%of the objects, but the data have bigdifferences with that of net profits, a traditional financial index, which are23%,26%and12%separately. These data suggest that many companies were not creating values than they seemed to be. Last, executive compensation wasset as a dependent variable, and EVA, enterprise scale and ownership, manstock, occupation of the manager and chairman of the board, and percentageof independent directors were made independent variables to establish amultiple regression model, then relationship between executive compensationand the other factors were analyzed. The results show that executivecompensation has a significant positive correlation with enterprise scale andownership, while has slight but strengthening positive correlation with EVA.There is a positive correlation between executive compensation and man stockbut without significance. Its relationships with occupation of manager andchairman and the percentage of independent directors are not clear.