The Relationship Between Executive Pay And Corporate Performance

With the development of science and technology, the social division of labor is getting smaller, and the enterprises’scale is growing. The business owners can not undertake the day-to-day management activities of the enterprise independently limited by their professional levels, they began to hire the experienced professional managers responsible for the management of the enterprise, in order to getting more benefits. Nowadays, the competition between companies is turning into a talent competition, especially competition for senior managers. The senior managers of the company are responsible for the corporate vision, goals and strategies, and they control over the operation and management of enterprises and have decision-making power. An effective pay system can attract more talents, and inspires the company’s senior managers to work harder to improve the company’s operating results, and have a positive effect on the company’s operating management.At home and abroad, there are a lot of researches about executive pay and company performance, but the focus of numerous studies is on the different sample empirical relationship between the two. There is little comparison from the nature of the industry analyzes. A series of historical issues due to the legacy of China’s economic transition, China’s economy has a strong administrative color. Combined crossover characteristics of natural monopoly and administrative monopoly industries, they have more representative with respect to the non-monopoly industries. Comparative analysis of the monopoly industries and non-monopoly industries is the entry point to absorb the essence of the results of previous studies, the use of the combination of normative and empirical analysis.Research content and research framework of this paper are as follows:Chapter1:Introduction. Describe the background and significance of this research. Describe the research method and the overall textual structure arrangements. Elaborate the innovation of this paper and the key and difficult points.Chapter2:Literature Review. This section summarized the literature achievements at home and abroad for the relationship between executive compensation, equity incentive and corporate performance. in accordance with the domestic and foreign scholars focus.Chapter3Theoretical review.This part of the study involved the theory defined, contains the connotation of the senior management, the scope of executive pay, as well as the division of the monopoly industries. Second, this section describes the theoretical knowledge involved in the study, including the principal-agent theory, tournament theory.Chapter4:Empirical study design. Summarized the research results at home and abroad in the second part, the study told the assumption of this article. Learn from the results of previous studies we build a regression model, and select the independent variables, specifically addressed the dependent variable and the control variables. This section will also be carried out on the empirical sample selection and data sources explained.Chapter5:Descriptive statistical analysis. This section is intended to be divided into the listed monopoly companies and listed non-monopoly two parts, a comparative analysis of corporate executive pay status and executives’ equity incentives multiple regression analysis. This section is to be divided into two parts listed monopoly companies and listed non-monopoly companies, then give the multiple regressions using their sample data, and give the empirical results.Chapter6: Conclusions and Recommendations. This chapter to be concluded on the basis of to combine empirical test results, test hypotheses makes recommendations.Although there are a lot of analysis about empirical research on executive compensation and corporate performance, there are no studies from monopoly industries and non-monopoly industries.This paper based on industry comparison study can make up for the current research blank in China’s current social and economic situation and have important practical significance. This is a major innovation of this paper.However, due to the author’s limited level, the established model is relatively simple, and the sample selection data is chose for only one year, and didn’t cover all the A-share listed companies on issues. The research has still a lot of flaws where the place I need to improve.In this study, there are some limitations:Firstly, the data which is disclosed of listed companies in China is not comprehensive and has different standards, so there are some limitations in the choice of the sample data in the empirical research. In this study we choose the sample data disclosed A shares of listed companies in the2011-year, the one year data leads to the lack of longitudinal comparison. This article data there may eliminate process defects such as ill-conceived, resulting affect the empirical results.Secondly, the research model and the differences in research methods have effects on the test. In this paper, the summarize of the executive pay and corporate performance theories are not comprehensive and in-depth. There are some limitations in the selection and design of alternative variables and control variables. We use shareholding proportion of executives of listed companies to measure the equity incentive, whether the index is highly effective is not sure, as well as control variables that affect the performance of the company choose, so the empirical study has limitations.