Research On The Correlation Between Executive Compensation And Ownership Structure And Performance Of Listed Financial Enterprises

Economists focus on executive pay has increased in the past10years, but thestudy of these economists mostly from developed countries such as USA and UK.Availability of the developed country data is another important reason on executivecompensation. Considering the corporate governance may play an important role ineconomics’ development, so the research on executive pay increases constantly.However, since the research of executive compensation in developed countries is soimportant. It is also indispensable to the firms in developing country. Especially forthe transition economies, striving to change their state-owned enterprisesbecome modern enterprise through various kinds of reform measures. Effectivemanager incentive clauses are the key factors to the success of transformation.Because executive performance salary on behalf of top management incentive system,so it is meaningful to study whether the performance of modern enterprise has certaineffect to executive compensation, which providing the necessary information of thecurrent and future reform measures.Foreign scholars for corporate governance research had started earlier, andthe mechanism of governance’s compensation is the focus in the corporategovernance. Their study was more advanced than our country. But in view of thespecial institutional background in China, conclusion of foreign researchers do notnecessarily apply, so it should be based on the advanced idea of the combination ofChina’s specific situation, and then deepen. Based on this, this article through propertyrights hypothesis, agency theory and corporate governance theory, discusses therelationship between Executive Compensation, Ownership Structure and FirmPerformance in Chinese Financial Corporations.This study examines the relationship between executive compensation,ownership structure, and firm performance for Chinese financial corporations during2001-2012. The results reveal that executive compensation in Chinese banks follows arelation-based rather than a market-based contract. There is little evidence in supportof the pay-for-performance setting for Chinese executive compensation. Ownershipconcentration has significantly negative impacts while firm size has significantlypositive impacts on CEO compensation. Further, the involvement of state ownership tends to limit executive compensation, while the compensation committee isfriendly and enhances management compensation. The results suggest that thegovernment or regulation may ensure efficient corporate governance in businessactivity as a helping hand when corporate governance is weak. Theresults of managers and board members of the salary management and incentivelevel measurement is of great significance, but also control the risk in the financialindustry also has important significance.