Executives Incentive And Executives Turnover

Since the appearance of company, the relationship between entrust and agent hasalways been troubled in the field of theory and practice, the owner of the capitalentrusted their assets to operators, for the purpose of letting the operators managetheir assets. The proprietary right remains to investor, at the same time, operatorsunder the circumstances of people who entrust their assets to you, the operators couldcontrol, possess and use the assets Shareholders possess the ownership of theenterprise, enjoy residual claims, and take corresponding risk at the same time. Theycare about the maximization of enterprise value; for the managers who possess thepower of management, they master the right of control of the enterprise, they concerntheir own effectiveness maximization. effective management incentive is a keysolution to solve the mechanisms of these differences, salary incentive and stockrights incentive are the main incentive mode listed in Chinese companies.Since1999, Chinese state-owned enterprise began to implement managementincome hook with the management of the enterprise performance, try to perform theannual salary system, hold the stock rights, in September2005, China launched theseparation of stock rights reform plan, to solve the malpractice of quoted companiesin China for stock rights incentive system, these systems have the disadvantages ofhaving the same stocks, but don’t have the same rights or having same stocks, butdon’t have the same benefit. in January1,2006, the new revision of the company law,the bond law have penetration in the company capital system, buy-back companystock and senior management personnel during the period of transfer the possession ofstock, the listed company eliminate of the legal barriers in the implementation ofstock right incentive, bring a good prospect in the listed companies in China forexecutives stock right incentives.This paper investigates the executives incentive system in Chinese private listedcompany, in the aspect of incentive effect, using the correlation analysis andregression analysis to check out the relationship between executive’s pay incentiveand alter of executives, the results show, there are significant negative correlation between executive holdings and alter of executives, there are negative correlationbetween executive’s compensation and alter of executives, moreover the holdings ofexecutives have more significant power of incentive effect on alter of executives thanexecutive’s compensation, which shows that the executive holdings incentive inmodern enterprise are playing a more and more important stimulation.