Research On The Incentive Mechanism Of Senior Management Of Listed Companies And Corporate Performance

Building effective incentive mechanism of executives of listed companies is one of the core issues of economics. And also, it is not only related to the the efficiency of resource allocation of China’s socialist market economic system and improve the modern corporate governance as an important tool. At this stage of such a special period of economic development of China, building efficient incentive mechanism for promoting enterprise reform in China has a very significant impact.The problem about the incentive of senior management of corporate has been the focus of attention in all aspects. This paper introduces the principal-agent theory. And then,combined with the theory, it analyze and explaine the incentive mechanism and characteristics of Listed Companies in China. This paper selected the overall data about1640companies listing in A-share form stock markets of Shanghai and Shenzhen. The deadline for these samples is December31,2009.Also, the paper extract the data about the senior management form200companies. Then, this paper examines the relationship of the total amount of executive pay and corporate performance and the relationship of shareholding proportion and corporate performance. The article gets two conclusions as following:(1) there is a significant positive correlation between the relationships the total amount of executive pay and corporate performance;(2) there is a significant positive correlation between the relationships of the proportion of managerial ownership and corporate performance. Meanwhile, the level of executive compensation and shareholding are grouped regression analysis, the conclusions is as following:the higher salary levels is, the stronger the positively related relationship of total pay of senior management and corporate performance become; Proportion of the increase in performance does not necessarily bring the a increase in corporate performance, there is a certain positive correlation between both. But the positive correlation of the change in the trend has some irregularities. This shows that compensation incentive of corporate performance takes an more important role in enhancing corporate performance and compensation of senior management constitute the main part of the incentive mechanism.This paper concludes with some suggestions. China’ s enterprises should further improve the incentive mechanism, and pay more attention to the role of incentive of equity. It is necessary to implement a variety of incentives and combine with each other. On the other hand, we must also cultivate a sound capital market and professional managers and improve regulations and laws related to a number of supporting measures to promote Chinese managers diversification incentives, making the operation of constraints and incentives more efficient.The study deepens the understanding about the corporate performance and incentive mechanisms for excenting.The Innovation is to closly link the corporate performance with the shareholding porportion and total compensation of senior management and to test their relationship postitting. The article has some significane for impoucing the cotporate govermace,and increasing the stockholding wealth and returns,and promating the development of capital marhet.