An Empirical Study On The Motivation Of The Contrarian Between Executive Compensation And Corperation Performance

With the separation of corporation ownership and control, the role of corporation governance has become more and more important. As a most important aspect of the corporation governance, executive compensation has gradually become a research focus. At present, the existing research results on executive compensation mainly focused on the research to the influential factors and compensation performance sensitivity. According to the Optimal Contract Approach, incentive compensation linked to performance can alleviate the principal-agent problems, improving the compensation-performance sensitivity. Unfortunately, the compensation rising with performance decline is still endangering our salary market. However, the scholar’s research on the reason of contrarian between compensation and performance is really rare. This paper will stand on this point, use panel logit to find the influence factors about the contrarian, hoping to enrich and improve the existing research results.In this paper, theoretical analysis and empirical research are used at the same time. Based on the theory of executive compensation, combined with results of previous studies, this paper will use theoretical analysis to construct a theoretical framework from assessment information heterogeneity, executive power, ownership concentration and executive changing. After a series of selections,1289A-share listed companies are chosen to be samples. After controlling the Short Debt and Growing etc, this paper use panel logit to find the reasons why executive and firm performance go contrarily. The results show that assessment information heterogeneity, executive power and ownership concentration have positive influence on the compensation-performance contrarian, but executive changing has negative influence. Moreover, SOE(State-owned Enterprise) is principal effected by the heterogeneity between accounting information and market information, but NSOE(Non-state-owned Enterprise) is primary effected by the heterogeneity of accounting information. Simultaneously, the impact of equity restriction and executive changing in SOE are stronger than it in NSOE. However, the executive change have stronger influence in NSOE. This paper studies the reasons for compensation-performance contrarian innovatively, enriching and improving the system of corporate governance theory. At the end of the paper, we can contribute to propose some practical advices about developing reasonable compensation contract.