Empirical Analysis On Managerial Power Influence Of Executive Compensation

Executive compensation has always been the hot topic of the theory and practicecircles concerned. With the establishment of a modern enterprise system and the disclosureof executive compensation, the “ultra salaries” event occurred repeatedly in the listedcompanies at home and abroad in recent years, and caused the great controversy by thepeople from all walks of life.Combined with the reality background of China, the essay analyzed the relationshipbetween managerial power and executive compensation under the guidance of optimalcontract theory and managerial power theory which are based on the principal-agent theory.This paper explored the specific influence of managerial power to the executivecompensation. So, we discussed the following problems:(1)What is the correlation betweenmanagerial power and executive compensation in China listed company?(2)For thedifferent nature of the company, what is the different about the impact of the managerialpower to the executive compensation?(3)What is the different about the impact of themanagerial power to the executive compensation in the administrative monopoly industriesand non-administrative monopoly industries?In order to solve the three problems, we choose three indicators to describemanagerial power through the variable of CEO duality, decentralization of stocks andshareholding. We selected8683listed companies from2007to2012as the research object,making empirical analysis of the relationship between managerial power and executivecompensation. In summary, we get the following conclusions: First, there is a significantpositive correlation between managerial power and executive compensation in China listedcompany. The bigger power management has in companies, the greater compensationincreased; Second, the influence of the managerial power to the executive pay are positivecorrelation in the state-owned enterprises and private enterprises, and the influence ofprivate enterprises is more significant than the state-owned companies,but the conclusion isnot stable, only CEO duality as the power indicator, the conclusion can be fully established;Third, managerial power has significant influence on executive compensation in thenon-administrative monopoly industries, but the effect is insignificant in the administrativemonopoly industries. Finally, we put forward some policy suggestions from three aspects,including improving corporate internal governance and the external market supervisionmechanism, making more effective compensation contracts, regulating informationdisclosure of executive compensation and so on, we also pointed out the limitations andoutlook of this paper.