Research On The Relationship Of Ownership Concentration And Executive Incentives With Corporate Performance

Ownership structure is the basis of corporate governance, executive compensation incentive as an important mechanism of corporate governance, there is a complex and close relationship between the two. In the modern enterprise, the executive staff, as the development of the enterprise management and decision makers and executives, have a vital role in the success or failure of the enterprise. In order to alleviate the conflicts between the shareholders and executives, the necessary incentive for executives to become an important means to solve the principal-agent problem, then how to solve the incentive mechanism is the key to solve the problem and improve the value of the company. Previous studies on executive compensation and corporate performance of the literature, but few are based on the general existence of the listing Corporation of China’s "big shareholder control" background, the equity concentration and executive pay incentives in a unified field of in-depth study. With the in-depth study of corporate governance, the impact of equity structure on executive compensation incentive is also more significant. Based on the background of "big shareholder control" and the actual controller of listing Corporation, this paper mainly studies the influence of the concentration of ownership concentration on the executive compensation and the performance sensitivity of the listing Corporation, in order to obtain the corresponding empirical evidence.This paper reviews the relevant research literature, and on the basis of the theory, the optimal contract theory and management theory, analyzes the impact of ownership concentration on executive compensation contract. Secondly, the paper constructs a measurement model, which includes the equity concentration and executive compensation incentive factors. The paper uses mixed OLS and fixed effect regression method to verify the effect of the equity concentration on executive compensation and equity concentration, and the corresponding policy recommendations.This paper draws the following conclusions: first, the executive compensation incentive of China’s GEM Listing Corporation can promote the improvement of the company’s performance; second, the first major shareholder’s shareholding ratio and executive compensation into a non-linear relationship, equity balance degree and executive pay is positively related. With the increase of the proportion of large shareholders, the greater the value of the company increases, and when the major shareholder has reached a certain proportion, the self consciousness is obvious, and the executive compensation level is reduced. Third, the stock right concentration and the pay performance sensitivity increase. When the first major shareholder realizes absolute control, the compensation performance sensitivity decreases Finally, this paper puts forward the following suggestions: first, to seek a reasonable ownership structure, in China’s current system, economic environment, the relative concentration of ownership structure is more conducive to play the incentive and restraint of the remuneration contract, so that executives in the real sense of the interests of the company to work hard.The two is to promote executive compensation incentive mode of diversification, the implementation of monetary incentive and equity incentive scheme, while improving the transparency of executive pay disclosure, not only in the pay level to make a mandatory requirement, but should be in the executive pay structure to make the corresponding disclosure. Three is to improve corporate governance and supervision mechanism, to ensure that the independent director, the board of supervisors to play due oversight functions, to achieve effective supervision of senior executives.