An Empirical Research Of Listed Companies On Agency Conflicts And The Quality Of Information Disclosure Of Executive Compensation

The subprime crisis of the United States caused a global financial tsunami. Some big financial firms closed down, and many multinational companies have also suffered a heavy blow. Rate of unemployment in some countries increased sharply. However, in the contrast of this situation, the executives of those companies could still get considerable salaries. This gave rise to a global discussion. Obviously, information disclosure of executive compensation of listed companies is quite necessary. But by now, most of the system files are aimed at either state-owned and state holding enterprises or financial sectors. The general guidelines of listed companies are seldom. The current normal disclosure guideline is the Standard No.2which is issued by China Securities Regulatory Commission in2007. In December30th,2011, an exposure draft of the Standard No.2was made known to the public. In this draft, some parts of the information disclosure of executive compensation were adjusted.Will the information disclosure of executive compensation, as a component of listed companies’information disclosure, be impact by these factors? The difference of the information disclosure of executive compensation among Chinese listed companies still exists, as the disclosure guidelines of China Securities Regulatory Commission are still need for improvement. What is the difference among Chinese listed companies? Will the factors that affect listed companies’ information disclosure also influence the information disclosure of executive compensation of them? What kind of practical significance will the regulation of listed companies’information disclosure of executive compensation be? The answer of these questions will be helpful for future study and Securities Regulatory Commission control of information disclosure of executive compensation. The motivation of topic selecting is to answer the questions above.Based on agency conflict problem of listed companies, this research is mainly about the relationship between agency conflict and the information disclosure of executive compensation, from three angles including agency costs, incentive level and managerial power. Some researches confirm that agency costs and incentive level will affect the quality of information disclosure of listed companies. Well the managerial power will affect the assessment and issuance of executive compensation, and affect the quality of information disclosure indirectly. As a part of information disclosure, executive compensation disclosure should possibly be affected by these three factors above.This research shows that agency costs, incentive level and managerial power do affect the quality of information disclosure of executive compensation:to strengthen the regulation of information disclosure of listed companies’executive compensation is helpful for reducing agency cost; to strengthen the regulation of information disclosure of listed companies’executive compensation is helpful for promoting the incentive strategy utility; to strengthen the regulation of information disclosure of listed companies’executive compensation is helpful for reducing the managerial power in certain extent.The main significance of this study includes theoretical and regulatory aspects.Theoretical aspects:although the researches on information disclosure are numerous, but the researches on the information disclosure of executive compensation are not easy to find. An effective way to measure the information disclosure of executive compensation still needs to explore. This paper is based on sample of Shenzhen Stock Exchange. Based on the result, this paper suggests a feasible way to appraise the quality of the information disclosure of executive compensation, and enrich the research in this area. Also, this paper provides a conclusive support and direction of reference for future study.Regulatory aspect:it seems that China is continuously improving the quality of disclosure requirements for listed companies’executive compensation. But the regulation still lack of relevance. Although some improvements were made at the end of2011, it is still unclear that the supervision of this could help. Through this study, some factors which could affect the information disclosure of executive compensation are revealed, and both the necessity and practical significance are clearly pointed out, so as to further improve the regulation of the information disclosure of executive compensation. The limitations of this paper are about sample selected and the quality evaluation method of the information disclosure of executive compensation.