An Empirical Research Of Corporate Governance Impact On Executive Compensation Of Listed Company

Some foreign scholars had begun to research and explore how to reduce agency cost and make it not damage the stockholder wealth, so as to achieve win-win since the1920’s. From21century, the global economy has entered a rapid development period, and enterprises gradually become scale and complicated as a source of economic development. Competition in business is not only need strong material capital as guarantee, but also need more excellent talents of management and technical personnel as human security, so as to make the enterprise develop in stability. Executives have close relationship with the enterprise’s prosperity. It is important for enterprise to choose good executives and give them sufficient incentives. In order to ensure the executives make to maximize shareholder value, enterprise must design reasonable incentive measures and corresponding restraint system. However, in recent years, the link between salary and performance is becoming weaker, thus public media begin to pay more attention to executive compensation. What is the role of the corporate governance on the formulating of executive compensation? How is the effect of the corporate governance on the executive compensation? All these are the problems to be solved.Based on the financial crisis for background, this paper chooses state-owned listed companies in Shenzhen and Shanghai stock exchanges as research object over the period2003-2009Executive compensation is divided into two parts, including short-term and long-term incentive, to research how the corporate performance and corporate governance effect on executive compensation. The empirical result indicates that, the phenomenon that executives have zero shareholding is serious, and generally, executives have lower shareholding, these mean that corporate governance lacking long-term incentive, From the corporate performance point of view, the performance has an significant relationship with short-term incentive, while the relationship between performance and long-term incentive is not significant. In the aspects of the corporate governance, shares held by the first shareholders have a negative correlation with the executive compensation, that is to say ownership concentration can supervise and constraint executives effectively in some extent. The size of the board, and the proportion of the independent board have a significant relation with the executive compensation, this indicates that, the board and the independent board do not play their regulatory role at all. Although the board of supervisors has some regulatory function, the relationship between them is weak. Finally, in accordance with the problems found in the research, this paper proposes several improvements, such as carrying out pay diversification, arranging for the ownership structure of state-owned listed companies reasonably, improving the board structure and manager market and so on.