The Empirical Analysis Of Public Corporation Managerial Discretion And Salary Bargaining

One of the core strategy of solving the agency problem is executive compensation design in the Modern Corporation,it is not only an important mean to incentive executives, but also need to take account of shareholders’interest. Executive compensation design properly can improve the relationship between company performance and executive compensation, it also enables the company to obtain a benign development. For a long time, executive compensation has been the focal point in the study of foreign theory and practice. The executive compensation strategy of public Corporation need to consider various factors, such as executive individual characteristics, managerial discretion, development situation, the wishes of shareholders etc.. Among them, managerial discretion refers to executives have freedom of choice in the strategic choice, a high level managerial discretion improves the effect of executive power to the fate of the company. Because the company’s performance and output is uncertainty, so managerial discretion has inherent risk, a high level managerial discretion means hoping a high performance of the company. In the intense competition market today, the speed of responsing to market needs more and more quick, more and more executives were given high level managerial discretion. However, high level managerial discretion may serve the company, may also serve executives, therefore, exploring the relationship between managerial discretion and senior executive compensation, the relationship between managerial discretion and senior executive compensation bargain power, the relationship between managerial discretion and senior executive compensation and company performance have certain practical significance.This collection of public corporation is from 2007 to 2012, a total of 30537 observations. In the basis of the analysis methods, factor method is used to measure managerial discretion, and then descriptive statistics, bilateral stochastic frontier model, maximum likelihood regression method are used to study the relationship between the executive discretion and executive compensation, and the relationship between executive discretion and company performance and executive compensation. The empirical results show that:the executive discretion and executive compensation has a positive correlation; on the whole, the public corporation executives have more bargaining power, increasing the executive discretion can significantly improve the bargaining power of executive compensation; when executive discretion is low, there is a significant correlation between executive compensation and corporate performance, the sample in which executive compensation and corporate performance is not related are mainly concentrated in the upper level stage of discretion, at the same time, strengthening the power of the board of directors can improve the connection of corporate performance and executive compensation and executive discretion.Finally, based on the theoretical analysis and empirical test results, we propose several suggestions to perfect the public corporation’ executive compensation policy:Improving the internal control system to effectively regulate the public corporation executive power; strengthening the independence of the board of directors, increasing the power of board of directors; Guiding the public corporation to develop appropriate executive compensation policies.