The Nature Of Ultimate Controller、Two Types Of Changes In Fair Value And Listed Companies Executive Compensation

The fair value of the measurement model was drew into the Accounting Standards for Enterprises in 2007, which led to huge structural changes in earnings. On June 1,2009, The Ministry of Finance issued Accounting Standards for Business Enterprises No.3 Explain, and ruled that "changes in fair value included in the equity" must be included in other comprehensive income. Two types of fair value is a part of the company performance, and company performance usually represents the ability and efforts of executives, which is one of the important reference index of executive salary. Because of different presentations of two types of the changes in fair value, the paper wants to investigate the different effects of two types of the changes in fair value on the executive compensation.Because of our country’s national conditions and unique economic system, "public ownership as the main body, a variety of all economies developed". It is concludes that China still has many state-owned enterprises, they play a pivotal role in the process of economic development in China. it is concluded that China still has many state-owned enterprises, they play a pivotal role in the process of economic development in China. But due to the unique identity and historical factors of the state-owned enterprises in China, it leads that state-owned enterprises have many disadvantages in principal-agent relationship. These disadvantages cause the operating efficiency drops in a large number of state-owned enterprises, and cause the effectiveness of the compensation-performance contract reduces. So this article will further analysis of the correlation of executive compensation and two types of changes in fair value between the different nature of property rights.On the basis of academic research at home and abroad, this paper considers the property differences of the special social and economic system in China. With treating the impact of fair value as the research orientation and executive compensation contract perspective as the breakthrough point, this article will discuss the correlation between two types of changes in fair value and executive compensation in listed companies, and will also further analyze the correlation of two types of changes in fair value and executive compensation between the different nature of property rights. This article raised questions follow, research basis, theoretical analysis and empirical study in this concise study of the ideas and methods. The technological paths are literature review, basic theory, theoretical analysis, research design and empirical test, combining with contract theory, principal-agent theory, incentive theory, property rights theory. On the basis of the hypothesis testing results, this article will discuss the correlation between two types of changes in fair value and executive compensation and will also further analyze the correlation of two types of changes in fair value and executive compensation between the different nature of property rights in A-share nonfinancial firms affected by the fair value measurement during the year of 2010 and the year of 2013. The main conclusions are:both Changes in fair values recognized in the gains and losses and real surplus are significantly associated with executive’s compensation, but listed companies pay more attention to the Changes in fair values recognized in the gains and losses; Changes in fair value included in other comprehensive income is significantly associated with executive’s compensation; Compared with the ultimate control of state-owned listed companies, the sensitivity between executive compensation and Changes in fair values recognized in the gains and losses is stronger in non-state-controlled listed companies.In view of the theoretical research and empirical research, there are three innovation points in this thesis. First of all, the model of compensation considers the equity incentive as a control variable. Equity incentive is the long-term incentive to executives, with the same interests between the executives and the long-term interests of the enterprises. In the model of executive compensation contract, Stock option incentive can make the effectiveness of executive compensation contract be improved. After introducing the fair value measurement, the quality of accounting earnings information gets improved and the performance of companies can be measured more accurately. Second, in the previous research achievements, some articles have brought property right in the research scope, but property right is just introduced in their studies as a control variable. With property rights as the explained variable, this article will analyze the correlation of executive compensation and two types of changes in fair value between the different property rights. Third, it is the selection of the samples. The thesis selects the sample years during the year of 2010 and the year of 2013, which can help assess the effect of two types of fair value on senior executive remuneration contracts precisely and comprehensively.