Research On The Correlation Of Executive Compensation And Corporate Profitability Of Chinese Central State-owned Listed Enterprises

The executives of Chinese central state-owned enterprises play an important role in deepening enterprises’ reform, adjusting economic structure, improving operational quality and efficiency. In the wave of income distribution reformation, the reform of central state-owned enterprises’ executive compensation is a significant and difficult part. In order to enrich existing research and perfect the executive compensation plan, it is necessary to investigate the correlation between executive compensation and corporate profitability in central state-owned listed enterprises.Adopting the combination of theoretical research and empirical study method, this paper firstly summarized the literature achievements at home and abroad. Secondly, the paper combed the related theories, including theories on central state-owned enterprises, executive compensation and corporate profitability. Thirdly, the paper presented current situation of executive compensation in central state-owned listed enterprises by using questionnaire survey and inquiring related websites. Fourthly, based on the related theoretical analysis, six hypotheses were put forward. From the aspects of business profitability, capital profitability and earnings quality, this article chose different index to integrate factor profitability as the dependent variable, and at the same time, independent variable and control variable were chosen to carry out an empirical analysis on the correlation of executive compensation and corporate profitability of Chinese central state-owned listed enterprises. Through the analysis, this thesis drew the conclusion: in central state-owned enterprises, executive pay was positively related to the profitability, but there was a difference in different industries. The way to receive compensation had an influence on the corporate profitability, it was better to unify the executive compensation plan. The percentage of executives shareholding were weekly related to the corporate profitability, long-term incentive plans are generally not efficient. The rational pay gap of top management had a significant positive correlation influence, it was benefit to adjust the executive compensation gap within a certain range. Finally, according to the research conclusion, the paper proposed suggestions to improve executive salary plan of Chinese Central State-owned listed enterprises.