An Empirical Study On The Relationship Between Executive Pay And Corporate Performance Among Chinese Listed Financial Companies

As one of the most important industry which connects with various industries in the national economy, financial industry is related to the development of economy. And it can optimize capital allocation and adjust the development of real economy. With the development of globalization and financial liberalization in1990s’, the efficiency of world financial market has been greatly improved. However, under this open financial background, ongoing financial industry also confronts with huge risks and challenges. Many problems were exposed in financial industry after financial crisis in2008. one of the problems is the rationality of executive pay. Subsequently, U.S. and European Union have been enacted limiting the salary of government relief fund of financial firms to limit executive pay. No matter if limit executive pay is the temporary measures for some companies to get through the financial crisis, it is the time to think about establish complete executive pay system in China now.Based on the data from listed financial companies, this paper uses empirical analysis to test incentive effect of executive pay, and reveal the relationship between executive pay and corporate performance. Furthermore, this paper also tries to provide some suggestions and recommendations for establishing executive pay system in Chinese financial industry.The first part is the introduction. This section describes the research background, methods, research innovation and shortcomings, etc. The second part is the literature review for related incentive theory. Related incentive theory was introduced, and research situation in China and western countries was summarized brieflyThe third part is the comparative study for executive pay system of financial companies in China and western countries. From corporate governance perspective, the executive pay systems of U.S. and Germany will be introduced. And then summarize the advantages from U.S. and Germany’s experience which can be used for improving the executive pay system in China.The fourth part, based on the related theory which was mentioned in the previous part, empirical research is used to analyze the relationship between executive pay and corporate performance for Chinese listed financial companies. Descriptive statistics data shows that the current situation of Chinese executive pay system. And significant test and regression analysis are used to analyze the relationship between executive pay and corporate performance in Chinese listed financial companies.In the last part, combining U.S. and Germany’s experience with empirical research result, recommendations for improving China’s executive pay system is proposed from government, enterprises and executives perspective.