Study On The Relation Between Executive Compensation Incentive Of Listed Family Firms And Agency Costs

Private economy is a major force of national economic system, and the family businessis the main body of the private economy, family business’s survive and thrive has arousedwide concern. With the separation of ownership and control right, reducing agency costs hasbecome an important family business issues. Managers play a very important role in themodern business, incentive for managers has become one of the core issue. Design andimplement a plan to reduce the agency costs of family business executive pay has become aprominent research topic. Based on this, the paper take the data of483listed family firms in2010as samples, have made a more detailed study and discussion of the relationship betweenfamily business executive compensation and the agency costs.At first, this paper analyzed the data of China listed family firms by2010, found that theexecutive compensation of listed family firms is not fully reflect the value of human capital,salary structure is single and other issues. On this basis, Investigate the relationship betweenfamily business executive compensation and the agency costs, studies show that:(1) Theannual compensation, ownership percentage and the pay gap of senior executives of listedfamily firms are negatively correlated with agency costs.(2) The classification of familymanagers and professional managers shows that professional managers to reduce agency costsis more effective.(3) The deviation coefficient of family control and cash flow rights isgreater, corporate executive compensation mechanism for the effect of agency costs will bereduced.