A Study Of The State-owned Listed Company Executives Retiring Impact On Performance

At present, the retirement age of our country is according to the approved document the Regulation on the Arrangement of sick elderly and Cadres and the Retirement or Resign of Workers on Second Session of the Fifth National People’s Congress. The document state that except special working industry or disability, the retirement age for men are 60 and 50 for women(executives are 55).Due to the above provisions, making executives have no promotion encourage at retiring age. In order to maximize their own interests, executives are likely to sacrifice the interest of the state or the enterprise. According to Legal Blue Book of 2014,the “59-year-old phenomenon” is still significantly exist : based on the case data, it was found that the oldest public officials who have corrupt behavior is 64 years old and the youngest is 39 years old, where 51-60 years old public officials are accounted for 53.7%. Corruption is the obvious damage executives do to the firm’s performance when they are retiring. But the “hidden” damages of retiring executives do to the company are less likely to be mentioned. On the one hand, executives probably improve workers’ payment to become alliance with them in order to maintain the “internal network” and maximize their own interests more easier, which will lead to the increase of companies’ expenditure and finally result in the decrease of companies’ performance. On the other hand, due to the need of executive performance appraisal, considering the investment expenditure is the regulator of firm performance and executive cannot own the interest of the investment under retiring situation, executive may reduce the investment cost to increase companies’ performance. In addition, due to the strict retirement regulation of state-owned company and the absence of owners, makes state-owned companies’ executives have more motives and power to improve their selfish interest when they are retiring, and may do more damage to the company.In this paper, we first sort out and summary the relevant literatures, based on existing theories, and put forward the proposes of our paper. Second, we selected 573 listed companies in Shanghai and Shenzhen A-share as the samples of our analyze, while we use Stata10.0 to analyze our data, we have the following empirical findings: first, the state-owned companies’ executives will have negative effect to companies’ performance under retiring, which is not significant. Second, the state-owned companies’ executives increase the payment of workers will have significantly negative correlation with performance when retiring; the state-owned companies’ executives decrease the investment expenditure will have significantly positive correlation with performance when retiring. Third, the increase of payment is contrary to the compensation contract and makes payment incentives lose their efficiency, thus will have bad effect on future performance in state-owned companies; Due to the inefficiency of investment of state-owned company, executive reduce investment expenditure will lead to increase of firm’s future performance in state-owned companies. Last, this paper propose reforms based on the empirical findings, hope it can control and improve the situation of executives damage to companies performance under retiring.