An Empirical Study On The Contributing Factors Of Executive Salaries Of Real Estate Company

Since the reform and opening up, China’s economy is developing very quickly. Especially in the recent ten years, real estate industry has reached unprecedented boom and highly social concern. Executive annual salaries of real estate enterprise are high. Executives hold the survival of enterprises and future development strategies, and the competitions between modern enterprises are actually the competitions between wisdom, ability and contacts of executives. Many modern enterprises have a same situation that ownership and management are separated, and attorneys hired by shareholders master actual power management. The primary problem at present is how to ensure the interests of the shareholders, how to effectively motivate agents to hard work, and how to supervise and inspect the performance of agents, so the research of executive annual salaries is to study the principal-agent theory. A good executive needs a lot of time and special environment to train, and he is scarce. Executives are the highest value of human resources, and executive compensation is the main incentive means of shareholders, so the research of contributing factors about executive compensation is very helpful for enterprises.Because the research about enterprise management in abroad started early, the abroad research is progressive. With the rapid development of our economy, people pay more and more attention to salary problem. The researches about salary in domestic and abroad are most normative researches, and base on the whole market. Because of our special system background, the conclusion of foreign research can not apply to our country. We need to combine the advanced idea with our specific market for further study. In process of data sorting, I found that the empirical articles and researches of special industry were little, and the conclusion had a big difference, and the researches of executive pay in real estate were especially less. Because the same index in different industries has different meanings, we need to focus on one industry for further research. Real estate is the pillar industry in China, and researches about executive pay of real estate are less, so this article chooses the contributing factors of executive compensation of real estate to study.Considering the accuracy of research conclusion, I choose real estate companies from 2007 to 2009 as main research objects. Because our country had a rapid economic development in 2007-1009, choose the data of three years to study is not only close to reality, but also able to find present changes timely. Although big data quantity in three years will increase workload in information collection and processing, the conclusion will be more accurate and rich persuasive. In order to find the most obvious factors and the link between these factors, I need to unify the past research conclusion, the present situation of market, and special system background of our country together to further study. This can help to understand the structure of salary of real estate industry, find the existing problems and perfect compensation mechanism.In order to do research of executive compensation comprehensively, I need to follow system steps. The first thing to do is to grasp the relevant research progress in domestic and abroad, and then to understand human capital theory, the principal-agent theory, management incentive theory, the entrepreneur market competition theory, the manager theory and corporate governance structure. Considering special system background of our country and situation of real estate at present, I choose executive pay as be explained variable, and enterprise scale, enterprise performance, the proportion of state, enterprise liabilities, enterprise place area, executive degree and age as explanatory variables. Specifically, total assets of enterprise represent to enterprise scale; the ROE represents to enterprise performance; state-owned enterprises are the enterprises whose largest shareholder is government; asset-liability ratio represents to enterprise liabilities; enterprise place area needs scoring method, such as eastern gets Five points、central gets three points and western get two points; executive degree uses the same method, such as Doctor gets ten points、Master get seven points、Bachelor gets five points、College gets three points and the others get two points. Because of the research purposes, I adopt a cautious and strict method on screening samples.I use the EXCEL to collect and settle data. The descriptive statistics show:in the past three years, executive annual salaries of real estate were high, and had a rise trend; the ROE had a steady rise; enterprise scale had an obvious and rapid enlargement; region influenced executive pay evidently; Executive pay risen as the proportion of state-owned shares decreased; Asset-liability ratio had a slightly expansion. The next step is to do Multiple Linear Regression. After correcting the models of three years, I got the conclusion. The relations between executive pay with Enterprise scale, the proportion of state, located enterprise area, executive degree and age were testified to be valid. The relations between executive pay with the ROE and asset-liability ratio were not through the test.Because the modern business management started late in china, and our country is in the economic transformation, the formulation of executive compensation mechanism is not perfect. According to the study conclusion, I put forward the following suggestions:first of all, we need to perfect the salary examination system; secondly, we need to rich salary incentive modes; thirdly, we need to reduce the government shareholding in enterprises, and to connect executive compensation with corporate earnings; fourthly, we need to increase the disclosure transparency of executive compensation; fifthly, we need to emphasize the function of compensation committee on supervision, and then to further improve the structure of corporate governance.