The Influence Of Political Promotion Incentives Of SOE Executives On Political Catering Behaviors

With the deepening of SOE reform, to establish a rational executives incentives becomes a key factor in determining the success of SOE reform.The personnel exchange system of government and enterprise allows the state executives has both "entrepreneurs" and "government official" identity features.Under this background,our country has formed a special incentives, that is political promotion incentives.In recent years, research in this area are gradually concerned by our scholars, they mostly studied the political promotion incentives to the role of corporate performance, but the study of the affection of this incentives to managers’ behavior is very lacking.This paper summarizes the literature and reality, to create a new concept,that is the political catering behavior, which is the behavior that SOE executives in order to get their own political promotion, they do something to meet the needs of government departments, but not be benefit to the long-term sustainability of the enterprise.This paper mainly studies the impact of the political promotion incentives on political catering behavior.Considering the needs of local government performance and the SAC for consideration state executive performance appraisal methods, this paper selects over investment and earnings management, which is the two most typical political catering behavior, to research.The empirical results show: First, the political promotion incentives will lead to state executive in order to get political promotion to meet the needs of local governments to make the behavior of over-investment, this positive relationship is more obvious in the chairman, but salary incentive can undermine this positive relationship, and the salary incentive to the manager produces more significant inhibition.Secondly, the state executive will make earnings management behavior to meet the financial and administrative performance evaluation promoted SAC, but salary incentive also can undermine the positive correlation.All in all, the political promotion incentives is not the long-term incentives which can completely improve our company’s performance, but is the incentives harm than good which can take a short effect, false prosperity, but still bring a lot of political catering behaviors.This study is to improve the state-owned incentives theory. The results of this study takes theproper assessment of SOE reform policies, in particular the effect of selection and implementation of incentives to provide a new analysis of ideas.