An Empirical Research On Compensation Incentives Of Chinese Private Companies

The problem of executive compensation incentives is always an important problem on the corporate governance study, the relationship between executive compensation and corporate performance is a hot topic on corporate finance. Reasonable wage-encouraging mechanism can effectively motivate top-managers to work hard, make agreement on interests of the principals and agents, improve the efficiency of investment, and decrease the risk of information asymmetry. After equity division reform and financial crisis, the change of macro-economy environment brings significant challenges and opportunities to the top-manager of private listed company, and provides a good opportunity to study the relationship between executive compensation and corporate performance.In this paper, we selected242private listed companies in Shanghai and Shenzhen from2009to2012as a research sample, and the balance penal data includes968effective observation. We used return of equity and Tobin’s Q to measure the corporate performance, and divided into two aspects:monetary pay and share proportion to measure executive compensation. Then this paper established multiple regression equation mode and used ordinary least square to study the direct effect of executive compensation incentives, and then studied the intermediary role of investment efficiency between executive compensation and corporate performance.Through proceeding study, summarized conclusions of this thesis are as follows:First, without consideration of the mediator-investment efficiency, executive compensation are positively correlated with the performance. The short-term incentive effects of monetary compensation incentive are significant, and equity incentive mainly played long-term incentive role. Second, under-investment is more than over-investment in private listed companies in China at present, the monetary compensation incentive and equity incentive can effectively alleviate the level of under-investment together, the decrease of over-investment mainly depend on equity incentive. Third, after adding the mediator-investment efficiency, the empirical results shows that investment efficiency in the relationship between executive compensation and corporate marketing performance played a role of partial mediation.Finally, the article put forward some suggestions about executive compensation incentives based on the result of this research, then summarized the deficiency of this paper and the prospects for the study on similar field in the future.