The Study On The Relationship Between Board Informal Hierarchy And The Sensitivity Of The Executive Pay And Firm Performance

After years of market-oriented reforms, our company has gradually established a performance-related pay system. However, the validity of executive pay system has been a hot topic of concern academics and theorists. As the main role of executive pay maker, the board has been the focus of attention. Related studies show that structural features and operation of the Board and executive compensation contracts are closely related, Research in this area have deepen understanding of the characteristics and performance ability of the Board of Directors. In this context, drawing on social identity theory and higher echelon theoretical research, Starting from the directors of individual behavioral characteristics. To investigate the effect and mechanism of functioning of the Board and its functions to achieve the objective has become a hot research topic.In this paper, we used 2011-2013 Shanghai and Shenzhen listed companies as samples, and estimate the Board Informal Hierarchy. Based on the perspective of the effectiveness of executive compensation contracts, to investigate the relationship between the Board Informal Hierarchy and effectiveness of executive compensation contracts. And study the relationship between Board Informal Hierarchy and executive pay under the contract and investigate the effectiveness of different situations and provide a new perspective and conclusions.The empirical study found that:(1) there are significant positive correlation between executive pay and corporate performance, and Board Informal Hierarchy can reduce this positive correlation; (2) Compared with the results of the rise of the company, only when the performance of the company in decline, Board Informal Hierarchy can reduce this positive correlation; (3) When the highest level of informal hierarchy Board is an independent director of the company, Board Informal Hierarchy can reduce this positive correlation;(4) Compared with the state-owned enterprises, Board Informal Hierarchy can reduce this positive correlation in private enterprises...