An Empirical Research On The Executive Pay Rigid In Listed Companies In China

In recent years, executive compensation has always been a hot topic, and also has beenthe focus of theoretical research. As a way to solve the principal-agent problem, executivecompensation’s essential purpose is to motivate managers to work hard for shareholders’benefits, and to maximize shareholders’ interests by increase the enterprise values. As thedevelopment of market economy,more and more listed companies choose performance typepay as compensation of managers, the system of executive compensation of listed companiesin China gradually tends to be more and more reasonable. However, the focus on most listedcompanies by the society has always been whether the executive pay is too high or not. Itshows us that the decline of the performance in many listed companies does not lead to thesame degree decline of executive compensation, and this phenomenon is called CompensationStickness. How the executive pay changes worth our further research. After a long time ofresearching the executive compensation, scholars both at home and abroad have continuouslyverify the result of the related theories, and the research content is constantly changing.Thispaper analyzes the current situation of China’s listed companies executive compensation andperformance evaluation basis.Based on data of manufacturing listed companies,we selectcompanies which disclose the relevant data of the company between2008and2012in Shanghaiand Shenzhen Stock exchange as the research sample, and build the model. By usingdescriptive statistical analysis and regression analysis method, we first examines thesensitivity between executive compensation and corporate performance of China’s listedcompanies, does the empirical test for the existence of executive compensation stickness.Then studies the influence factors of executive compensation stickness-the time factor andthe ownership concentration. Finally, according to the results of the empirical research, wesums up the conclusion and the future research direction, and put forward the correspondingpolicy recommendations.According to the empirical analysis,we conclude:(1)executive compensation of listedcompanies in our country is affected by the company’s performance, and the company’s performance has a positive effect on executive compensation.(2)The change extent ofexecutive pay in the company is different between the rising and falling conditions. When thecompany’s performance rising, executive pay adds more, but when the company’sperformance falling,executive pay falls less.When company performance changes, thechanges of executive pay is asymmetry, and the executive pay is sticky.(3)This suggests thatunder the immediate supervision of the media and supervision department,the executivecompensation stickness is eased over time.(4).It also tells us that there exists executivecompensation stickness and it is influenced by the ownership concentration factor.