Correlation Research On Executive Power, Compensation And Corporate Performance In Monopoly Industry Listed Company

In recent years, the problem of executive compensation has been praised by the socialattention, excessive executive compensation incentive, executive compensation and firmperformance in which way correlated, the reported frequently appeared in the media. From theexisting literature, compensation incentive can not solve the problem of entrust-agent well,executives may use their power to influence their compensation. The mechanism ofcompensation decision also becomes part of the agency problem. At present, the literaturefrom the executive power compensation and performance influence’s degree is relativelyscarce, and needs to be further research. Based on this, this article will make monopolyindustries listed company as the breakthrough point, from the perspective of managementpower, executive compensation, and corporate performance to in-depth analysis theircorrelation.This paper uses the method of normative research and empirical research. In terms ofnormative research, first of all, paper combs the correlation of executive power, executivecompensation and firm performance in theory, then dicusses the definition of monopolyindustries and defines the monopoly industries from the perspectives of market monopoly,natural monopoly and administrative monopoly. Second of all, paper takes the formation ofexecutive compensation, the division of executive power and the structure of performanceevaluation system in depth analysis. Finally, it explains the important theoretical basis of thispaper, the theory of monopolistic behavior, principal-agent theory, power rent-seeking theoryand the theory of corporate performance entirely. In terms of empirical research, firstly, ituses the mathematical statistical formulas to explain the mechanism of regression analysis,and proposes the premise of empirical analysis and selects and measures about the studyvariables based on theoretical analysis. And then selecting the listed companies of monopolyindustries from Shanghai and Shenzhen A-share as samples, it is undergoing descriptivestatistics and regression model. After that the correlation of executive power, compensation and performance from monopoly industries is verified with the methods of overall samplelinear regression, a regression analysis of the yearly and lag linear regression. The studyshows that the compensation of top managers from monopoly industries generally is notrelated with the company’s financial performance indicators; instead it is significantly positivecorrelated with company’s market performance indicators in lag regression analysis. Theproportion of top managers shares owned is also not related with business performance andmarket performance indicators in the listed companies from monopoly industries. Topmanagers from monopoly industries will use their power to influence their own compensation,especially recessive compensation. The power of top managers from monopoly industries isnot linearly correlated with company performance. Finally, it gives some suggestionsaccording to the result of regression, hoping that it is benefit to the formulating of topmanagers from monopoly industries, the motion of top manager power and the improvementof firm performance.