Relationship Research On Executive Compensation Incentive And Firm Value

Under the mechanism of Principal-agent, effective incentive contracts including monetary compensations and perquisite consumptions can inhibit executive’s opportunism behavior, balance the interests between shareholders and executive. In recent years, the high compensation and perks of executives in listed companies has attracted a lot of attention. SASAC has introduced a series of reform programs on SOE executives’ compensation, which highlights the state’s great emphasis on this issue. At the same time, the "second agency problem" between ultimate controller and minority shareholders becomes a hotspots in academic research.This article will take both monetary compensations and perquisite consumption into consideration, put the two kinds of agency problem into the same research framework. We select a panel data of listed companies in our country from 2010 to 2013, standing on the perspective of the separation of two rights of ultimate controller, to investigate the interaction effect of executive compensation incentive mechanism.After reviewing the existing research achievement, based on the ultimate property right theory, through empirical study this paper find out:(1) the relationship between explicit monetary incentives/implicit perquisite consumption and firm value can all be featured by U shape; but the U shape isn’t significate in SOE; (2) the separation of two rights has a negative effect on firm value, furthermore, considering the property of ultimate controller, the negative effect is more significate in SOE; (3) with the increasing of the separation rate of the two rights, ultimate controller will weaken the positive effect between executive compensation incentive and firm value, the weakening effect is more significate in non-stated owned enterprises.