Study Of Effects Of The Redundancy Burden And Compensation-performance Sensitivity

Redundancy is a big burden on our enterprises, especially a major burden on state-owned enterprises, which severely restricts the enterprises’ long-term development. Chinese state-owned enterprises to bear the burden of the policy is the product of government intervention. While China’s state-owned enterprises establish a modern enterprise system and improve the ownership structure, all levels of government is still in control of the state-owned enterprises. Redundancy burden will lead to a significant decline in the performance of state-owned enterprises, so that enterprises’ performance can not exactly measure the CEO’s effort. Although there are many scholars proved redundancy burden will affect the company’s incentive mechanism, there is less literature provides evidence for this conclusion. Domestic research mainly investigated from the static mechanism of executive compensation. The study found the redundancy burden of state-owned enterprises can significantly reduce executive compensation-performance sensitivity. At the same time there are few scholars continue to dig deep affiliation and local administration from the property to explore the relationship between research redundancy burden on executive compensation-performance sensitivity of the economic consequences.In view of this, based on our special institutional background, this paper collected in the Shanghai and Shenzhen A-share listed companies in the non-financial sector board panel data from 2009 to 2013.By comparing the research, study the impact of differences in the executive compensation-performance sensitivity on the different levels of government. Using OLS regression analysis to test the model, comprehensive multi-angle analysis of the impact of redundancy burden on compensation-performance sensitivity. Firstly, We Discuss the impact of redundancy burden in the executive compensation-performance sensitivity by comparing samples of SOEs and non-SOEs sample. Then, we further discuss and prove the redundancy burden affect executive incentive mechanism from the property level. The state-owned enterprises are subdivided into central government-owned enterprises and local government-owned enterprises. Deeply, the local government-owned enterprises are subdivided into provincial government-owned companies and municipal government-owned enterprises. Finally, we give the prospect of relevant policy recommendations and future research.This study found that, compared with non-state-owned enterprises, state-owned enterprises to bear the redundancy burden will be significantly reduced executive compensation-performance sensitivity; The state-owned enterprises in accordance with different affiliations property is divided into central government-controlled enterprises and local government-controlled enterprises. The study found, the local government-controlled enterprises which bear the redundancy burden will significantly reduce the sensitivity of executive pay and corporate performance compared to the central government-controlled enterprises; Subsequently we found that compared with the provincial government-controlled enterprises and municipal government-controlled enterprises to bear redundancy burden will be significantly reduced executive compensation-performance sensitivity.Studies have shown that, to make executive pay and corporate performance linked effective rely on the institutional environment. The impact of corporate executives incentives are not the best choice. To improve the corporate government structure and to establish a market-oriented executive incentive contract for China is very important.