Study On Marketalization Process, Managerial Power And Compensation Stickiness

Principal-agent theory is the logical starting point of modern corporate governance, and the agency problem is the prime problem of the company’s internal management needs to solve.To relieve the contradictions of interests are not consistent,enterprises need to formulate the compensation incentive system with the enterprise performance to measure managers’ effort. However, the restriction of the internal and external environment, executive compensation of listed companies at home and abroad presented to the characteristics is that does not match with the performance,namely the increase as the executive pay in the company’s performance or increase amplitude is greater than its reduction in performance decline, and academic defined the phenomenon as viscous executive pay. To a certain extent, the existence of executive pay viscous has offset the Positive effect of Salary incentive. The message about executive based on its power to influence the compensation was frequently in the news reports. The control right of executive is promote the action about executive take over interests of the company. The phenomenon often appears in our country.Compensation stickiness was born in corporate governance, which cannot be ignored that reflects the defects of corporate governance in China. In this paper, introducing the marketalization process of the exogenous variables to research the impact on compensation stickiness in the perspective of executive control.Firstly, combined with China’s institutional background, the paper put forward a point that is in the process of market-oriented reform, the listed company executive control of gradually expanding and internal governance defects are all provided the convenience for executive to use their power to influence compensation contract. The article discusses managerial power make effect to the executive compensation stickiness. However, apart from the shareholders and operators work together to improve the management level, the corporate governance also is affected by the external system. With the process of market-oriented reform, market forces are important external institutional factor to effect the compensation incentive effectiveness and management power. This article also discussed under different marketization process, the control right of executive has different effect for compensation viscosity.Secondly, choose Shenzhen and Shanghai a-share listed companies from 2009 to2013 as samples to establish model of regression analysis. The study found that five alternative of executive control variables have significant correlation with executive compensation stickiness. ownership concentration, the two level-one, executives shareholding and modification is significant positive correlation with compensation stickiness, the independent director shareholding and executive compensation viscosity is significant negative correlation. In addition, under different property rights, the strength of the executives use their power to influence compensation contracts have certain differences. After grouping study found that the affect of executive control right to compensation in the state-owned enterprise is more bigger to the non-state enterprises and executive pay viscous is higher, it may be because the state-owned enterprises face more administrative intervention, blurring the causal relationship between the corporate performance and operator’s ability. When introducing marketalization index, how different influences of executive control to compensation stickiness, and found that in the higher marketization area, the influence of the executive control over pay is smaller and compensation stickiness has more lower. The stronger power of marketization has some constraint for executive control right. It means the marketization process has a significant adjustment between executive and compensation stickiness, can reduce the compensation stickiness.Finally, according to the analysis of the articles and in combination with the system background of the our country, the paper put forward the some good suggestions, such as perfecting the compensation disclosure system, enhancing the rationality of executive compensation, perfecting the corporate governance external constraint mechanism to check and balance executive control, establishing the executive hiring and exit mechanism in market and continue to introduce independent director system which provide a good environment of independent director’s fully exercise their powers.