Study On The Relationship Between Executive Compensation And Enterprise Performance Under The Effect Of Institutional Investors

The growing ranks of investors under the circumstances, and the impact of institutional ownership on corporate governance the role of deepening, more and more senior managers and scholars have started to pay attention to and study institutional ownership to participate in corporate governance function. Executive compensation has always been an important component of the internal corporate governance mechanism, according to the principal-agent theory, the management compensation is reasonable and help alleviate the management and ownership of the contradiction between them, so as to reduce the agency cost, executive compensation as an incentive measure of shareholder, shareholder returns of enterprise management,enterprise performance has a great influence. The scale of institutional investors is expanding constantly make their investment management consciousness improved,they realized the importance of participation in corporate governance. To further the pursuit of maximizing their own interests, institutional investors have to try every means to participate in the internal management of enterprises, and through the executive compensation to the enterprise is an important way to monitor the institutional investors to participate in corporate governance, it also significantly increased the sensitivity of executive compensation and corporate performance,corporate performance naturally affected thereby.In this paper, based on the existing basis of research, analysis of institutional ownership and executive compensation effect relationship and firm performance,further the enterprise into state-owned enterprises and private enterprises, and according to the heterogeneity of institutional investors, the institutional investors will be divided into fund, brokerage, qualified foreign institutional investors(QFII), the social security funds, insurance companies and other mechanism of 6 types ofinstitutions, respectively discuss the various types of institutional investors hold the influence degree of state-owned shares and shares of private enterprises executive compensation and corporate performance. Related data from China’s Shanghai and Shen Zhen two city in 2009- 2013 A shares of listing Corporation, using the model and several hypotheses of the thesis makes an empirical test.According to the regression analysis in this paper can also be learned that our country enterprise executive compensation incentive mechanism is perfect, our country listed company executive pay and performance, improve the enterprise senior management personnel salary can bring better benefit. Institutional shareholders have also been large shareholders on behalf of the enterprise began to actively participating in corporate governance, rather than passively waiting for management, report management, they are more willing to form began to take the initiative to supervise the company, they return in order to get more interests, willing to actively participate in corporate governance, involved in major decisions, into the enterprise executive compensation system is one of the ways that are most likely to affect the corporate governance. Under the influence of different institutional investors, executive pay levels has different effect on corporate performance. The fund, QFII, and other institutional shareholders will get actively involved in making the enterprise executive pay, which have significant effect on corporate performance. This paper puts forward Suggestions, such as: continue to encourage the development of institutional investors,to encourage institutional investors participating in corporate governance, make effective top managers compensation incentive system, integration of the distribution of the equity of listed companies, the shareholder structure diversification, perfect the enterprise system of laws and regulations, etc.