The Effect Of Enterprise Pay Performance Sensitivity On The Political Association Role

Along with the development of age,after20years of reform,private economy has overcame several disadvantages,such as the weak foundation,the congenital deficiency,became rapidly the most active economic growth point in the national economy,playing an increasingly important role in the national economic development.However,due to reasons such as system and market,the survival environment of private enterprise is still not optimistic,generally having worsened in recent years.In particular,along with the deepening of reform and opening up,the government has got more autonomy in economic development,playing a key role in the allocation of resources,therefore,the government environment has become one of the important external environment which the private enterprises face with.In order to achieve the further development of private enterprises,private enterprises often hire executives of political background to build political association.From the perspective of government,here is a close relationship between the government and executives of political background,and executives of political background have higher political prestige,they will have an incentive to help the government achieve its political objectives with the purpose of maximizing his political interests,it means political connection provides convenience for government intervention to the enterprise; From the perspective of enterprises,through executives of political association,it is easier to get limited resources from government,enter into the restricted monopoly industries,obtain more tax breaks etc.,therefore,private political association which enterprises establish is a "double-edged sword",moreover,salary incentive,as a kind of modern contract,has a significant impact on its role of political association.Salary incentive which conducts one of a kind of contract mechanism,its purpose lies in prompting the consistence of agent behavior with the principal target.And,determining the relationship of compensation and performance is the core content of compensation contracts,when executive pay and performance hook,meaning the compensation performance sensitivity is high,on the one hand,executives, serving as "economic man",in order to obtain high remuneration, will reach corporate performance,seeking to maximize their own economic interests,who will take advantage of the close relationship with the government, helping employment enterprises fight for scarce resources,on the other hand, executives with high salary incentive,will actively use link between the government,influencing the relevant policy governments make,partial inhibiting "government intervention" governments impose on the enterprise to achieve their political goals.The article chooses pure listed private enterprises,which list in2007-2011as samples,adopts the method of empirical research with normative analysis,and empiricallly tests how the ideal compensation contract mechanism influences the role political association plays,when executive pay performance sensitivity is high, corporate political association is positively related with government subsidies, which plays a role of "relationship",and negatively related with employees burden, partly inhibiting "government intervention"government imposes on enterprises. After further distinguish between central political association and local political association,the empirical result shows that the local political background of the executives is significantly associated with the role of political association;And, executive pay performance sensitivity is low,which has no significant influence on the role of political association.This article,from the perspective of corporate governance,synthetically considering the "double-edged sword" role of political relations,points out the direction for the development of enterprises,and provides suggestions for the reform of the government.Therefore,in order to overcome the obstacles of private enterprises in the development,realize the further development of private enterprises,based on the conclusions this paper draws,it requires efforts from the government and enterprise two aspects.From the perspective of enterprise,information asymmetry two rights separation leads to,brings about the "adverse selection" and "moral hazard"of the operators,a reasonable salary incentive system can effectively solve of the low efficiency or inefficiency of the "moral hazard".Executives of political background whether can improve enterprise value or not,which depends on the intention or motive of the executives,executive compensation as an incentive mechanism,if it links to employment enterprise’s performance,in order to obtain good performance executives will actively use its political background to promote the performance of employment enterprise, achieving the role of "relationship" of political association.From the perspective of government,executives of political background provide opportunities for rent-seeking behavior of some interest groups,some interest groups seek its own interests,with the help of the executives,infiuencing the policy of the government and the enterprises,increasing the non-productive activities of private enterprises,making operating activities invalid or inefficient. Therefore,the government should take appropriate government policies,accelerate the pace of market-oriented reform,instruct relevant departments to effectively supervise market operation,improve the legal system construction,build the external governance environment of fair competition,reducing the possibility private enterprises establish a link between politics,paying more attention to their own production and business operation efficiency,promoting China’s economic growth,realizing the government macro management.This article includes five parts,the first part is introduction,mainly introducing research background,research significance,research theory and etc.;The second part includes the related research review and assumptions,mainly expressing the definition and measure of political association at home and abroad,the influnce political association has on economic activity,and the impact executive pay performance sensitivity has on the role of political association;The third part is the research design,introducing the filter condition of samples,defining the relevant variables,and presenting the related model of this paper;The fourth part is the empirical results and related analysis,carring on the empirical test of the main assumption of this article, and making further analysis;The fifth part is this article conclusion and corresponding policy suggestions.