Management Power, Compensation Contracts And Corporate Value

Salary income scholars have been paid attention to is an important part of the income distributionproblem. Pay system based on corporate performance have been gradually established by continuousreform in China’s listed companies and pay performance sensitivity gradually increased with themarket-oriented reform. However, in order to reduce the income gap, the government has introduced a listof policy focused on limiting high-income, especially in state-owned enterprises the implementation of theremuneration of executives is controlled. However, in order to obtain personal gain, the executives, in largepart, may the motivation and the ability to influence and even determine their own remuneration and use ofrent-seeking by virtue of their power, or achieve their goals through other hidden ways to the detriment ofthe enterprise value. Management compensation contract incentives are not necessarily the tools to solvethe agency problem, itself may also become part of the agency problem.In this paper, by using a sample of listed companies in China from2001to2010and combining theresearch methods of archival and normative together, we studied the relationship of management power, compensation contracts and corporate value.The results of this study found that: In the current system context, compensation contract still havesome incentive. Monetary incentive pay is more prominent in the non-state-owned enterprises than instate-owned enterprises, further showing validation agent inefficient in state-owned enterprises the reasonis that under the remuneration control in state-owned enterprises, executives pursue the incentive targetddiversifie, political intentions and positions to enhance co-exist with the economic interests of the target.In addition, we see job consumption efficiency concept, which has a certain rationality. In state-ownedenterprises, on-the-job consumption as an implicit incentive make up for the lack of monetary incentive payremuneration under the control defects, becoming an alternative to the monetary remuneration. Innon-state-owned enterprise executives working consumption is higher than in the state-owned enterprises, but does not lead to lower enterprise value, at least for the operating results of the negative correlation. Inthis paper, Considering further management powers to pay contract, we found that executives havemotivation and ability to take advantage of the power to affect the compensation contract and evenmanipulate their own pay levels to get excess pay to meet their own needs. However, the different nature ofproperty rights, the impact of focus differ. Executives of state-owned enterprises is more inclined to use itspowers to improve the working consumer due to the existence of the higher the remuneration control ofauthorities and supervision and restraint of government and legal policy, management executives with lesspower select a hidden way that power to acquire the Over-the-job consumption, causing a great negativeimpact on corporate value. Enjoy a lot of power in the non-state-owned enterprises, executives andshareholders of part-time, executive management powers to enhance the the excess monetary remunerationa positive impact on the enterprise value. Over-the-job consumption increased negative impact on theenterprise value, but management authority not further aggravate the negative impact of this.