| Managerial Power Approach can explain the managerial compensation stickiness what Optimal Contracting Approach can not explain. Managerial compensation stickiness can be defined as that asymmetric sensitivity of executive compensation to corporate performance:executive compensation to be less sensitive to the declining corporate performance (loss)than the rising performance (profits). Managerial Power Approach argues that boards of directors’ability to control compensation contracts is not very strong,and the shareholders is not always consistent with th%interests of boards of directors which has motivation and ability to influence their compensation. The existence of managerial compensation stickiness will weaken executive compensation incentive effects. Research on managerial compensation stickiness in Managerial Power Approach perspective helps to a correct understanding and evaluation of executive compensation system, and to improve the executive compensation incentive effects.The study data are obtained from real estate industry listed company which are going-concern ones from2007-2011.The research adopting the empirical method mainly focus on the influence of managerial power to executive compensation contract,including the influence to compensation level and sensitivity of executive compensation to corporate performance and also managerial compensation stickiness.The study especially focus on the influence of managerial power to managerial compensation stickiness. Executive compensation includes not only monetary form, but also includes executives shares, stock options, non-pecuniary compensation and other forms of compensation (Lu Rui,2008; XiaoFeng Quan, 2010).There is seldom listed companies in China taking implementation of the stock and option incentive in which fewer use their rights, therefore, in this paper, we use cash compensation and nonpecuniary compensation as executive compensation.The study also has a discuss on the influence of executive compensation to the company’s future performance.The full text follow the theory-the status quo-design-logical study of the proposed framework includes the following parts:First of all, on the basis of the introduced research background, which leads to the sticky characteristics of executive compensation and the influence of managerial power to executive compensation contract.On the basis of theoretical analysis and literature review,the paper summarizes an overview to managerial power,enterprise performance, executive compensation, executive compensation sticky by the domestic and foreign scholars,then leads to the research questions.Secondly, this paper takes the real estate listed companies as research samples, and uses statistical software to review our country real estate industry executive compensation of listed companies.It founds that the changing tendency between the executive compensation and firm performance is different, and combining with China’s national conditions, this paper states realistic basis of the real estate industry listed company managerial power. In the process of concrete empirical study, the paper classified the managerial power and the executive compensation. Managerial power is is divided into duality of CEO and chairman (POWER1), equity dispersion (POWER2), executive long-serving (POWER3) and two integrated variable (a virtual variable POWER4and an integration variablePOWER5), executive compensation is divided into two categories:executives cash compensation and non-pecuniary compensation.This paper established several multiple regression models, and, then used empirical research to find that managerial power how to affect the level of executive compensation and sensitivity of executive compensation to corporate performance. We should give a answer to this questionds sensitivity of executive compensation to corporate performance asymmetric with executive compensation to be less sensitive to the declining corporate performance than the rising performance.? Finally, the study finds that whether executive compensation has promoting effect on the firm future performance.Finally, through the overall reviewing of the real estate industry executive compensation and analysising of empirical results,this paper puts forward some restrictions to managerial power, and suggestions for weakening compensation stickiness of executive. By the results of theoretical analysis and empirical research we draw some useful conclusions:1. Through the review of executive compensation of listed companies of the real estate industry, this paper founds that China’s real estate industry listed company executives cash compensation has been increased all the time, and also executives non-pecuniary compensation has been hovering at high levels. The cash compensation of executives of state-owned enterprises are higher than private enterprise executives cashcompensation, but on-pecuniary compensation is lower than private enterprises. There is a lower sensitivity of executive compensation to performance in the real estate industry. There exists asymmetric sensitivity of executive compensation to Corporate performance:executive compensation to be less sensitive to the declining Corporate performance (loss)than the rising performance (profits).2.The paper make descriptive statistical analysis to the real estate industry listed companies and classified managerial power samples founding that company with duality of CEO and chairman have higher non-pecuniary compensation than two separate companies; Cash compensation and non-pecuniary compensation in dispersed shareholdings executives are higher than those of equity concentrated enterprise, and on the performance, performance is less than equity concentration of diffuse ownership enterprises; cash compensation of executives who serve longer is lowerr than those of shorter, but non-pecuniary compensation of longer ones is bigger than the shorter ones; Cash compensation and non-pecuniary compensation owned by powerful management executives are higher than those of owned by weak management executives.These all illustrates the management power do strong influence to. Compensation contracts.3. Through the regression model, this paper concludes:(1) As expected, the coefficients on managerial power and managerial compensation stickiness are positive. The more powerful as managerial power,higher the executives cash and non-pecuniary compensation are.(2) Under the influence of managerial power, there is a lower sensitivity of executive cash compensation to corporate performance what is opposite of non-pecuniary compensation.It can explain the influence of the managerial power. Management power plays an important role in sensitivity of executive compensation to corporate performance.(3)Under the influence of managerial power, executives cash compensation reflects the characteristics of stickiness, non-pecuniary compensation is even more sticky than that of cash compensation owning to the characteristics of the hidden.executives long-serving (POWER3) especially do significant effects on managerial compensation stickiness.(4)Managerial compensation stickiness didn’t make enterprise future financial performance (ROA, ROE) better, but to do good to the corporate market value (Tobin ’SQ). |
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