Empirical Analysis About Executive Incentives’ Impact On Firm Cost Performance

The marvelous growth of China’s economy since 1978 attributed to two kinds of cost,which are factor cost at a low price and transaction cost at a high price.Generally factor cost refers to the operating expense while transaction cost refers to the period expense in financial statements.But things have changed since 2013,transaction cost cannot contribute to enterprises as before in front of the anti-corruption drive,on the other hand factor cost straights up generally.There is no doubt that reform cost management to get new competitive edge seems more important at the new point.Top management team who control resources in enterprises is the key to promote firm cost performance,besides the separation of ownership and control rights results in that executive incentive becomes a big problem in companies. It is impossible for top management team to promote firm cost performance without executive incentives obviously,but will incentives selected truly make a contribution to firm cost performance?It is to be explored in this paper.In this paper we provide empirical evidences on consequences of executive incentives and firm cost performance,using SPSS software and a sample of A-stock listed firms in Shanghai stock exchanges from 2011 to 2014.The main conclusions as follows:First, monetary reward incentive helps promote firm cost performance,where the relationship is more stronger in non-state-owned enterprises in terms of operating expense as well as in state-owned enterprises in terms of period expense.Second,the consequence of equity incentive and firm cost performance is not significant in total.Finally incentive of power has a negative impact on firm cost performance,where the relationship is also more stronger in non-state-owned enterprises.