A Research On The Mutual Effect Between Changes In Executive Compensation And Corporate Performance In The Chinese Manufacturing Public Companies

With the separation of ownership and agency in modern enterprise, incentivecompensation for executives has become one of the important factors affecting theperformance of enterprises, executives increasingly compensation has become acommon phenomenon in all companies around the world, at the same time, therelationship between compensation incentive and corporate executive performancehas also been more and more attention of scholars at home and abroad.Most scholarsmainly study the unilateral relationship between the level of executivecompensation, the structure of executive compensation and corporate performance.Their research shows that the company performance will cause a significant impacton executive compensation. However, with the development and implementation ofthe salary incentive system, more and more compensation problems began to emerge,For example, how much should the fluctuation range of annual compensationbe,whether annual increase of executive pay can bring promotion effect on corporateperformance or not and so on. Based on these problems, I analyse the Effect ofcorporate performance on the change of executive compensation and thepromotion effect of the change of executive compensation on the corporateperformance in order to discuss the incentive and restriction effect of China’sExecutive compensation system comprehensively and thoroughly.Based on the principal-agent theory, theory of performance pay and incentive theory, the paper, in combing the existing research on the basis of the results,collected2009-2013executive pay and corporate performance data ofmanufacturing the A-share listed companies, test the interaction effect betweenexecutive compensation and firm performance changes by stepwise regressionanalysis and path analysis, mainly draws the following conclusions:(1) there was asignificant relationship between China’s manufacturing industry listingCorporation executives compensation change and corporate performance.Specifically, the increase of executive compensation listing Corporation is mainlyaffected by the development of the company’s executive compensation capacity, thedecrease or unchange is mainly affected by the positive impact of the developmentability and profitability of the negative effects, but these effects are smaller;(2)There is no significant relationship between the performance and executivecompensation listing Corporation changes, i.e. say, executive compensation changedoes not directly cause significant impact on corporate performance.The results of this study indicate that in our country, the manufacturingperformance of the listed Corporation will cause a certain impact on executivecompensation change, but the change of executive compensation does not affect thecorporate performance perfomance directly, indicating that executive compensationincentive and restraint mechanisms exist some problems. This study is to provide thetheoretical and empirical basis for further improving China’s listed companiesincentive compensation system and corporate governance mechanism, to provide thenecessary theoretical basis and data support for the design of enterprise executiveincentive scheme, and to perfect the executive compensation incentive mechanisminto the words and ideas.