Research On The Correlativity Between Management Power And The Sensitivity Of The Executive Compensation And Enterprises’ Performance

Theorists and practitioners all pay attention to the hot topic of executivescompensation, especially the executive compensation of state-owned listed company.Under the background of China’s special system, there exist some problems such asowner’s absence and insider control, which cause the executives of state-owned listedcompanies to use their power to change the compensation. Based on the two kinds ofhypothesis of formulating management compensation The optimal contract theory andmanagement power theory, this paper will discuss the correlativity between managementpower and the sensitivity of the executive compensation and enterprises’ performance andexplore its changes under the management power. Will the control level and the process ofmarket transition influence the correlativity between management power and the sensitivityof the executive compensationand enterprises’performance?This paper from the perspective of state-owned enterprises in our country, accordingto The agency theory and The optimal contract theory, firstly made theoretical andempirical analysis of the correlation between our country’s state-owned enterpriseexecutive compensation and corporate performance. And then based on the managementpower theory, this paper combined the feature of our country’s state-owned enterprisemanagement power and took the state-owned listed companies that had been disclosed datafrom2009to2012as the sample. Through the empirical analysis we can find thestate-owned enterprises in China have a significant impact on the correlativity betweenmanagement power and the sensitivity of the executive compensation and enterprises’performance. After considering the operation of the enterprise under the economy ofsocialism with Chinese characteristics, this paper further put forward to the governmentintervention’s influence on the company compensation management. Therefore, this paper introduced the control level and the process of market transition to further analyze thecorrelativity between management power and the sensitivity of the executivecompensationand enterprises’ performance under different control levels and marketization levels. Theresults showed that the local control state-owned enterprises have less correlativity than thecentral control state-owned enterprises. The regions where have a high degree ofmarketization have more correlativity; and the regions where have a low degree ofmarketization have less correlativity.This paper refined the research object, from a new perspective to study on thecorrelativity between management power and the sensitivity of the exec utivecompensationand enterprises’ performance. This paper brought the external governance factors in tothe research and these were beneficial supplements to existing researches.