The Empirical Test Of Executive Compensation-Performance Sensitive Affecting Factors In Financial Company

With the development of economy, our country enterprises have made a large amount of exploration in executive incentive system, in order to effectively motivate executives. Executive compensation mechanism, however, lacks of social identity. The public query the effectiveness of executive compensation incentive mechanism, calls for stricter restrictions on executive pay. On the other hand, executive compensation in finance among all industries is the highest. In this context, what are the main influence factors on executive pay in the financial industry, how to effectively supervise the salary system, how to reasonable arrangement of executive compensation system raised the attention of the scholars. In this background, this paper tries to analyze the influence factors of executive pay-performance sensitivity in financial industry, hopes to put forward suggestions for reform of executive compensation incentive mechanism in the financial industry for reference.This paper is based on the principal-agent theory, corporate governance theory, human capital theory and incentive theory of management, and analysis the special of banking corporate governance. Combining with domestic and foreign research, this paper selects corporate governance, leverage and growth to analyze the influence factors of executive pay in the financial industry, and focuses on analyzing the influence degree of the corporate governance structure to financial executive pay-performance sensitivity. On this basis, this paper puts forward seven assumptions, build multivariate linear regression model, specific for:executive compensation as the dependent variable, the company’s performance as independent variables, the proportion of independent directors, the board size, equity concentration, the chairman and general manager of the joining together of two position or not, the leverage and growth as control variables. This paper analyzes of the influence degree of various factors on executive compensation and pay-performance sensitivity by using 44 financial listed companies’ data from 2007 to 2013 year as research samples and modeling of multivariate linear regression.The empirical results show that, first of all, the current executive compensation has significant positive correlation with the former company business performance in the financial company listed companies. Executive pay-performance sensitive coefficient is 0.12. More important, the financial company listed in our country’s executive pay is affected by multiple factors. The proportion of independent directors and growth has a positive significant impact on executive pay, the asset-liability ratio and equity concentration has a negative significant influence on executive pay. The influence of the various factors on executive pay performance sensitivity is small. Only the proportion of independent directors has positive significant effect on it.Finally, according to the result of empirical test, this paper puts forward 4 suggestions on the executive compensation incentive mechanism of Chinese financial industry listed companies. There are:first, improving the system of the board of directors of the company; second, streamlining the board of directors; third, improving the executive compensation system; Forth, perfecting the executive compensation disclosure system. Hoping that Chinese financial industry listed companies will establish a more effective executive compensation incentive mechanism and supervision mechanism with company internal and external coordination.