Our Country State-owned Listed Companies Executives Zero Compensation Phenomenon And Its Governance Mechanism

After the subprime crisis, we observed that there were a lot of Chairman and CEO who received "0-salary" from the listed companies, but the annual reports show that they received Remuneration from the Parent company. In China, the state-owned listed company accounted for a large proportion, the paper tried to find the reason why the Chairman and CEO received "0-salary", and its influence on listed company.In the modern enterprise, there existed principal-agent relation. Some research thinks that management can use their power to improve their own compensation system and level. This paper considers that "0-salary" phenomenon is due to the managerial power. As the Chairman and CEO received "0-salary" form the subsidiary, they may use other way such as duty consumption to meet themselves. On the other hand, while the parent company pay for them, the connection between them is close, and the tunneling phenomenon would be more significant, then the value of company will be harmed.Based on the above assumptions, this paper uses the state-owned listed company’s2005-2009annual data to verify these hypotheses, and find that along with the managerial power weakened, more Chairman and CEO receive "0-salary" form the subsidiary, at the same time, there are more duty consumption and tunneling in these companies.The article shows that "0-salary" phenomenon not only weakens the executives’obligation as an agent, but also infringement the small shareholders right to know the salary information of the executives."0-salary" is the reflection of the dependent between the parent company and the subsidiary, which will encourage the executive pursuit the duty consumption and damage the value of the company. So the state-owned listed companies should establish and improve the compensation system, to avoid the"0-salary" phenomenon.